How do you deal with transferring your house to your children while continuing to live in it, in order to avoid having to sell the property should you have to go into care at a later date?
If you are thinking of doing this then you should immediately consult a solicitor as this is a fairly complex issue. Provided property is transferred a substantial time before entering into care – and 12 months would appear to be a minimum period – the asset will no longer be deemed to be yours when assessing your contributions towards accommodation charges in any Local Authority Home. There are, however, Inheritance Tax implications of gifting the property to your children while continuing to live there. If your Estate is unlikely to be a taxable one, the fact that the Inland Revenue will regard your continued occupation of the property rent free as a Reservation of Benefit – and regard the property as yours at the date of your death for Inheritance Tax purposes – will not have any adverse consequences as there will be no Inheritance Tax payable if the value of your Estate is below the relevant threshold.
You should also ensure that your right to continue to occupy is protected once you have given your property away. This should be done by taking a Lease for Life back from your children which will protect you should they want – or be forced – to sell.
• Emyr Pierce is Managing Partner of Emyr Pierce Solicitors in Rhiwbina, Cardiff, Western Mail Conveyancer of the Year, specialising in Domestic and Commercial Property.