Elderly Clients

Before you consider giving away your home to take advantage of the benefits that this may bring, take a moment and read this brief guide to make sure you are thinking through all of your options and their implications.

Objectives

• To ensure that the recipient of the gift ‘inherits’ the house rather than someone else. In this case, the same result can be achieved by making a will leaving the house to the recipient.
• To avoid inheritance tax. The threshold at which inheritance tax becomes payable is currently £300,000. So, unless your total estate exceeds this figure, no inheritance tax will be payable on your death.
• To pass on the worry associated with running your home, paying bills, attending to repairs, etc to someone else. If this is the main reason for giving away your home, then the same outcome can be achieved by making a Lasting Powers of Attorney appointing a trusted person to deal with your financial affairs.
• To avoid your home being taken into account during means testing in the unlikely event that you need to move into residential care in the future. Only approximately 1 in every 15 people needs to move into residential care.

Implications of making the gift
Possible Benefits

• Saving in probate fees and costs
  on death
• Avoiding the need to sell the home to
  pay charges such as residential care
  home fees
• Avoiding the value of the home being taken into account in means testing for other benefits or services

Possible Risks

• The value of the home may still be taken into account under the anti-avoidance measures in relation to means testing
• The Capital Gains Tax owner-occupier exemption may be lost to the recipient and there will be no free uplift to the market value of the home on your death
• You may never need residential or nursing home care (it has been estimated that less than 6% of those aged between 75 and 85 years are in residential care)
• If you eventually do need residential or nursing care but no longer have the resources to pay the fees yourself because of the gift of your home, the local authority may only pay for a
  basic level of care (e.g. a shared room in a home of its choice), so you may be dependent upon relatives to top up
  the fees if a better standard of care
  is desired

• The relative to whom you have given your home may fail to keep their side of any understanding you may have with them, whether deliberately or through no fault of their own e.g.

 -  They may fail to give financial support
 -  They may seek to move you      into residential care prematurely in      order to occupy the home      themselves or to sell it
 -  They may die before you without      making suitable provision for your      wellbeing
 -  They may run into financial difficulties      because of unemployment, divorce      or become bankrupt

• The home may be lost on the bankruptcy, divorce or death of the relative to whom you have given your home, resulting in your becoming homeless
• The relative to whom your home has been given may lose their own entitlement to benefits due to personal means testing if not living in the home themselves
• The local authority may even decide that notionally you still ‘own’ your home

Next Steps
Contact Brown & Company Solicitors to make sure that you understand all of your options clearly and that your decision suits your needs and those of your family.