Emyr Pierce

Professional Legal Services | Cardiff

Cardiff: 029 2061 6002

You are here: Home / Archives for asset

What will happen to my parents’ Estate if they go into residential care?

My wife and I are considering selling our home and moving into my elderly parents’ house to look after them.  My parents’ Will leaves their Estate to me and my sister but we would buy her share of the house on the death of my parents.  How safe are we though if one or both of my parents has to go into residential care and the only asset they have is the house?

If you moved into your parents’ home it would be sensible for your parents to transfer the property into the joint names of themselves and yourselves as this would take advantage of an exemption available to your parents in that they have transferred one-half of their interest in the property to those who also occupy the same.

This could safeguard against the whole of the property being taken to pay for future care fees, as only the half which your parents retained would remain in their ownership and would technically represent the half to which your sister would otherwise have been entitled in the event of your parents’ death.

Should your parents move into care in the meantime then it may be that only the remaining half share in their name would be assessed as evidence could be supplied to show the reason why the property had been transferred into your joint names.

Should your parents die without having to go into care then you would have to buy out the remaining half of the property from your sister as, technically, the half remaining in your parents’ names would  pass to your sister  on their death as you had already received your share during your parents’ lifetime.


* Emyr Pierce is Managing Director of Emyr Pierce Solicitors in Rhiwbina, Cardiff, Western Mail Conveyancer of the Year, specialising in Domestic and Commercial Property. Contactwww.emyrpierce.co.uk or email law@emyrpierce.co.uk

When does property become subject of the lifetime gift exemption?

If my father gifted his house to me, how long would he need to live for to ensure the taxman could not claim back taxes between the gift date and death?

A lifetime gift more than seven years before the death of the donor will usually be the subject of the lifetime gift exemption. If this was a gift of money or any other asset, once the seven years had elapsed from the date of the gift then the asset would no longer form part of your father’s Estate in the event of his subsequent death.

However, with houses it is slightly more complicated in that you must beware of the  “Reservation of Benefit Rule” whereby the Revenue will regard your father as having reserved an interest in the asset which he has given away, as he will continue to live in the property, without paying any commercial rent to you, the new owner.

In such circumstances the effect of the Reservation of Benefit Rule is that the Revenue will regard your father as having reserved an interest in the asset which he had previously gifted to you, the consequence of which will be that, for tax purposes, the Revenue will include the value of the property at the date of your father’s death in the overall value of his Estate.

Should your father’s Estate, inclusive of the value of the house, be below the Inheritance Tax threshold, then his gift will not have any adverse effect on the tax position as even if the value of the property is written back into his Estate, it will not be of sufficient value to result in any Inheritance Tax being payable.

If, on the other hand, the property is of substantial value,  what may appear to be a substantial saving in Inheritance Tax as a result of the gift may not necessarily be  available despite his lifetime gift should such gift fall foul of the “Reservation of Benefit Rule” .

* Emyr Pierce is Managing Director of Emyr Pierce Solicitors in Rhiwbina, Cardiff, Western Mail Conveyancer of the Year, specialising in Domestic and Commercial Property. Contact www.emyrpierce.co.uk or email law@emyrpierce.co.uk