Giving a property to the Children Tax
Care fees funding is much in the news at the moment with cross party negotiation taking place on the best way to fund care in later life.
The current position in England and Wales is that if you are worth more than £23,250 (including your home), you will be required to pay for your own social care. Nursing i.e. NHS medical care is paid for by the NHS. In short, you get your medicine but your board and lodgings you pay for yourself. This means many people have been forced to sell their own home to pay for their care. There is of course public outcry in that people have worked hard all their lives and then lose all their wealth if they need care.
I Will Give My Money Away - Deprivation
Many people take action to protect their money by spending it or giving it away. This may work but it may also be deemed as a deliberate deprivation of assets if you give money away when you already have an illness that may lead to the need for care. The only sure fire way to give money or assets away is to do this when you are younger and healthy by using bonds and trusts. But what about your home?
Gifting Your Home to Children
There are a number of problems with giving your home away:
How is POAT calculated?
The deemed annual benefit is the value of the home on a prescribed date multiplied by a rate of interest set by HMRC. However, if the benefit is under the deemed benefit annual limit, currently £5,000, it is not taxed.
Example One - House that you gifted into trust valued £150,000 on 6 April 2011:
Example Two - House that you gifted into trust valued £120,000 on 6 April 2011:
Professional Care and Estate Planning
Even in these few lines, we hope we have highlighted the pitfalls in something as simple as giving your home or a valuable painting or a vintage car to your children when estate planning. Asset protection really does need the help of a professional financial adviser.
Contact us and get advice on giving the house to the children.