Gifts and Transfers
There are many reasons why a property might be transferred to someone else either as a gift or for money including:-
- A couple might want to transfer a property into joint names (please see our section on joint ownership)
- As a result of a financial settlement on divorce or separation
- Under the terms of a Will when someone has died
- Under the terms of a Trust, sometimes to save Inheritance Tax
Sometimes there are good reasons to transfer property but occasionally, gifts in particular, may have unintended consequences.
- People sometimes think that if they give property to their children and survive for 7 years, that will save Inheritance Tax. In fact, if you continue to live in the property, the value of your home will still be included in your estate no matter how long you survive, unless you start paying a market rent for your occupation.
- If you give property away to avoid paying care home fees in the future, the local authority will look very closely at the circumstances. They have the power to overturn any gifts made deliberately to avoid paying care fees. This is known as 'deprivation of assets'. The local authority can look back any number of years. Many people wrongly believe that any gifts made more than 7 years ago are safe, but this is not the case. The '7-year rule' only applies to gifts for Inheritance Tax purposes.
If you are thinking about a property gift or transfer, whatever the circumstances, please contact one of our specialists in the Conveyancing Team. We will help you to decide whether it is the right thing to do and alert you to any unintended consequences.