Property Transfer

Property Transfer

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I hope this is not inappropriate, if so I am sure the moderators will move as necessary, but I wanted to find out if my summising of a personal situation might be correct.

I have a brother who, for various reasons, will now inherit nothing from my parents.  This has caused them a great deal of anxiety - they feel a bit better now they have changed their will!

The estate, in due course - and please may it be not for as many years as possible - will consist of a small 2 bedroom house - currently worth about £150,000 plus the solar panels they have just had put on the roof (very cool!).  Would be split between myself and my daughter.

The question is this - if my parents were to now transfer the ownership of their house to myself and my daughter (they want to avoid any question over legality of wills/contesting wills etc) and continue to live in it rent free, does it matter?

I understand the gift having a continuing benefit to them as they would pay no rent etc and so would not avoid inheritance tax - that does not bother me as the estate is unlikely to ever be worth anything like that and I presume I and my daughter would not be liable for inheritance tax in any case.

Is there anything else I need to be aware of?

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David Winch
By David Winch
26th Aug 2011 17:18

See a solicitor

I suggest your parents see a solicitor about their wills.

If they are fit and well (i.e. mentally not 'losing their marbles') there should be no problem with them leaving nothing to your brother (or even leaving everything to the local dogs' home) providing that yourself and your brother are adults who are not routinely financially dependent on them (in the way that a child living at home is financially dependent on his parents).

They should make new wills now with the assistance of a solicitor having fully explained the situation to the solicitor and getting his advice in writing.  They could then retain ownership of the house without worrying about their wills being contested.

There could be unwelcome tax implications if the house is transferred out of their names now (for example there could be Capital Gains Tax arising on the ultimate sale of the property in relation to any increase in the value of the property after they transfer it).

The other side of the coin however is that there MIGHT (I stress 'might') be advantages for your parents in not owning any property as they grow older in terms of State Benefits and costs of care in old age.

You might like to take advice on that aspect too.

David

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