A ‘home’ is more than bricks and mortar. It’s a place where we eat, sleep and make memories with friends and family.
It is also normally our largest asset.
Our clients are often anxious to make sure that the home that they have spent most of their working lives paying for passes to their children at the end of the day.
Many people ask if they can give their home to their children now, during their lifetime.
There are, however, a number of downsides to this. If you give your home to your children outright, they could ask you to leave.
This might sound dramatic, but perhaps you will have differing opinions on how you should be cared for in your later years.
It could be that you are pressurised into going into care sooner than you would have chosen to if the house had remained in your name.
This issue can be largely resolved by putting a trust deed in place, which gives you the right to remain living in the home for the remainder of your lifetime.
Nevertheless, there are other risks to consider.
The home will no longer be yours to sell and use the proceeds as you wish.
In addition, if your child subsequently gets divorced, your home would form part of their matrimonial ‘pot’ and would be taken into account when sorting out their finances.
Giving your house outright to your children could prevent them from being entitled to claim means-tested benefits.
Also, if your child dies before you, your home could be passed in an unintended direction, for example to their spouse, rather than to your descendants.
We have an ageing population in the UK. It is thought that around 2.8 million people over 65 will need nursing and social care by 2025.
This is, of course, expensive and those paying privately often face a hefty bill.
Anyone making an outright gift of property to children during their lifetime should be aware that, if the local authority feel that you have deliberately given away your home to avoid paying care fees, they may still take the home into account when calculating how much you should pay.
One way that couples can legitimately help to protect one half of their home for their children is to make wills leaving their respective shares of the property to their children, while at the same time giving the surviving partner the right to remain living in the property for their lifetime.
After the first death, the surviving partner continues to live in the home but the deceased’s half share does not actually belong to them; it belongs to the children.
If the surviving spouse then goes into care, only their share of the house will be taken into account when assessing their contribution to the care fees.
This is a very simplified overview of the current rules.
If you would like to know more please contact one of our specialist wills team.
