Is it prudent to transfer house ownership to your children ?

Question

This would be a question for UK citizens....Many people seem to transfer their property to their kids for financial reasons, mainly to escape payment to the Government for elderly care etc.. What are the Pros and Cons of this discussion ? Is there a penalty to be paid by the kids ? Serious answers please, this is an important issue for me.

Answer 1

Graham,
I have specific knowledge of a parent/child situation.The pair approached a specialist Solicitor and the parent was advised to draw up papers gifting HALF the house to the child. A clause was also drawn up giving the child Power of Attourney Individually and Severally with another relative.(in your case you could , perhaps,pick a close friend). This clause means that any decision made about what happens to the house, should the parent become mentally incapacitated or unable to decide for themselves, is made by the child and the other person who must be in agreement for the action to be taken.
Previous answers about Death, Debt or Divorce affecting the situation are true.
I am told that it is difficult for a creditor to get hold of your house if another person is still living in it and that British law in relation to healthcare provision has changed for the better anyway.
This is an important step Graham and you should get proper legal advice from a paid Solicitor who can answer all the specific questions about your personal situation.

Answer 2

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RE:
Is it prudent to transfer house ownership to your children ?
This would be a question for UK citizens....Many people seem to transfer their property to their kids for financial reasons, mainly to escape payment to the Government for elderly care etc.. What are the Pros and Cons of this discussion ? Is there a penalty to be paid by the kids ? Serious answers...

Answer 3

It depends upon the law of the state in which you live, and how you own your house (whether it's by tenancy by the entirety, joint tenancy with right of survivorship, or tenancy in common). The short answer is yes, you can usually transfer your undivided interest in the house to whomever you want (if it's a joint tenancy, it may switch to tenancy in common). However, note the following: (1) If your house is worth more than a few hundred thousand dollars, your kids may have to pay gift taxes on the transfer. (2) If they don't pay anything for the interest, they'll have a $0 basis, and will have to pay a huge amount of capital gains taxes on the entire sale price of their share if the house is ever sold. (3) If you have a mortgage on the property, your bank may be able either to (a) keep you on the hook, or (b) call the entire mortgage due for interfering with their rights in the collateral. (4) There may be other laws that prohibit this transfer, and it may affect the equitable distribution of the remainder of the estate, or you may be liable for wrongfully secreting away the "community property" (depending upon your state) and the transfer could be voided by the court as fraudulent. That's why a lawyer who's experienced in family law is important in this situation. Don't get yourself in trouble with the court, your ex, or the IRS. Do it right. Spending a couple grand with your attorneys now may save you tens or hundreds of thousands of dollars down the line.

Answer 4

I have been told that you should not transfer your house to your child (especially if married) because that child could become divorced and the partner file for half of the house thereby forcing the sale and making you homeless in the proceed.

It used to be the rule that if you transfer your house before entering a residential home or the like, the caring association could call on the new owner to meet the fees in retrospect unless the new owner actually lives there. Another job for Citizens Advice Bureau though to make sure of recent legislation.

Answer 5

Hi There

My parents transferred their house into my name, and it was in my name for a good 10 years before, it was sold. I obviously then gave the proceeds of the house back to my parents. I don't think their is a penalty to be paid, because what warrants a penalty in this situation, (check if the ruling of you living for 7 years applies). I paid the mortgage from my bank account, although my parents did actually pay it.

Just make sure your children are trustworthy before signing such an asset over to them. No offence meant.

All the best.

Answer 6

Here are a few cons to consider if you transfer ownership of your house to a child:
If the child is married or gets married and divorces; half of the child's ownership now belongs to the spouse.
If the child is in an auto accident and gets sued, your house can be taken away.
If the child gets into financial debt, your house can be taken away from you.

Answer 7

I think its a great idea!
not only do they get one of the best gifts you could ever give to them, but it stops the government grabbing every penny they can
Like the swindlers they are
after all, you have already paid your taxes, then they want more!
Take into consideration the new thing they want to impose though, if a house is left empty for more than six months, they want to be able to take it away and use it as funding or housing for people who in need. Make sure it never, never is left unused!
Soooo wrong its absurd!

Answer 8

from what I've heard the property would have to be in the child's name for at least 7yrs before the time the parent would be needing any full time care. otherwise the government can still ask for a contribution towards the care and can insist on the sale of the property. so the earlier the better id say. my advice would be to go see a solicitor. you ll defiantly be needing a good one if you do intend to transfer ownership.

Answer 9

A friend's mother was forced to sale her house to fund her residential home care. Her daughter did not get a penny! Had they know this would happen they would have transfer ownership to avoid this.

Answer 10

Gifts with reservation (GWR)

An asset that a person has given away may still be treated as forming part of the donor's estate on death if he or she has retained a benefit in the asset. An example is where a donor makes a gift of property but then continues to live in it rent-free.