Should I Put the House into Childrens Names?
Many parents put the house into childrens names in order to avoid care home fees. After all, the house is the biggest asset of most families, and parents want their hard work to benefit their children and grandchildren, not the Taxman or the Council!
Sadly putting the house into childrens names also exposes the parents to a wider range of totally avoidable risks, not the least of which is the fact that the authorities will probably consider the gift as “deliberate deprivation” and still include it as an asset of yours, even though legally it is not. This will leave you penniless pretty quickly!
“Reservation of benefit” – If you give the house away, but carry on living there, you will be treated as if you still owned it for Inheritance Tax purposes
Life interests – if you do not own the property, but have the right to live there for the rest of your life, you are treated as if you owned it for Inheritance Tax purposes
Pre-owned Assets Tax - an annual charge to income tax on the “benefit” of using assets that you once owned in the past, or assets that you have never owned but which were bought by their owners with money that you gave them.
Worse still, if you put the house into childrens name, the family home is totally at risk:
- If children should divorce, their share of your home will be used in calculating the settlement.
- If children have creditors, perhaps from business failure, drug abuse or just an accident – your home is at risk.
- If a child should die before you, your home could suffer Inheritance Tax at 40% which may mean the sale of your home. Why? Because you gave it to them and it was therefore part of their estate.
Our Home Protection Plan offers a way of creating an effective plan for passing on your house to your children, and avoiding the risk of their divorce or bankruptcy.
Contact us on 01323 741203 for an informal discussion to see if the Home Protection Plan may be appropriate for you or you parents. Whatever you do, don’t!