Consequences of gifts
Many people want to pass their home to their children in their lifetime and continue to live there. There are many consequences of such an action without getting appropriate advice.
The main reason for doing this is, of course, Inheritance Tax with care home fees a close second for some.
Each action has its own consequences. For instance, if you give your home away but continue to live in it then you need to pay a market rent otherwise the planning is going to fail and you could create a Capital Gains Tax liability on top of the IHT.
There may be additional consequences to gifting your home away. Firstly, you will need to have high levels of confidence in the recipients of your gift as any financial pressure on their part may force them to take action that you had not foreseen or intended. I had a client who gifted his house to his son. When his son divorced 6 years later he lost his family home when his ex-daughter-in-law forced its sale to take 60% of the proceeds. To rub salt in the wound, his son was hit with a £35,000 CGT bill because he didn’t live there.
As with all these matters solutions can be provided if proper thought and planning is involved.
For full and transparent discussions and information on how to negotiate these potential minefields please contact Barnet Wills on 0203 189 1737 or email firstname.lastname@example.org