What to consider when transferring a property to your children
At some point in their lives many parents consider the possibility of signing their house to their children.This type of estate planning has become increasingly popular as you are permitted to give your assets to your children at any time.
Should you transfer a property to your children?
Gifting a house to your children is not straightforward and there are a variety of matters that you may need to consider before making a decision.In our latest article, our expert solicitors take a look what you should consider before deciding to transfer a property to your children.Consider Inheritance Tax implicationsIf you were to decide to make an outright gift of a house to your child to reduce the value of your estate, it would be treated as 'potentially exempt transfer'.This means that if you were to die within 7 years of making the gift to your children, the property would fall back into your estate for Inheritance Tax (IHT) purposes. If you were to survive for 7 years after making the gift, there is no IHT bill.However, if you give away the house but continue living in it the transaction will probably be treated as a gift with reservation and will not be effective for IHT purposes.You won't be the legal owner of the propertyAfter transferring a property to your children it will be counted among their assets and you will no longer be the legal owner of the property, even if you carry on living there.This means that if you want to sell the property you will need an agreement from the new owner in order to do so. Equally, your children will have the right to rent or sell the property without your permission.There could be risks from outside partiesIf you do sign over your home to your children you should consider the risks from outside parties.For instance, if your child was to divorce they would have to include it in their assets meaning that their ex-spouse would get a share of it.If your son or daughter became bankrupt or insolvent the property would form part of their estate which could be targeted by creditors seeking to reclaim money owed to them.It is vital to be aware of all outside risks when you are transferring a property to your children.Are you seeking to avoid residential care home fees?One of the most common reasons given for transferring a property to your children is to avoid paying residential care home fees.However, the council could view this as 'deliberate deprivation of assets' in order to avoid residential care home fees. In other words, the council could take the view that you are attempting to conceal property wealth in order to avoid paying for care.If this view is taken by the local authority, they can reverse the transfer of ownership.
Get expert legal advice on your property transfer today
Before transferring a property to your children it is vital to seek expert legal advice from a dedicated solicitor.At Farnworth Rose, our trusted solicitors in Lancashire are on hand to offer the advice you need to help you plan for your future.To find out how we can help you, call us on 01282 695 400.Or, simply complete our quick online contact form and we will be in touch with you as soon as possible.