Reading in a popular newspaper a reader had written in asking this question.
The article made the point, that the reader would need to make sure they were legally protected, and could remain in the house.
It also advised setting up a trust to put the house in, using a specialist lawyer.
These two points are very valid. I would also add, such advice does not come cheap. Expect to pay £3-4,000+ for such advice and a trust. There are other points to be aware of, which were not mentioned.
The first one is time. Once the house is gifted, you will need to live seven years, for the gift to be forgotten, so it is good to start early! I come across older clients, who may have gifted a property a couple of years ago, who are worried about dying too soon!
In some cases, if you continue to live in the house, as previously, the Inland Revenue may say, it is a “gift with reservation of benefits”. What this means is, they feel, you haven’t really given it away. To avoid this situation, it would be a good idea to pay rent to the trust, with a proper rent book. If you have savings or investments you wish to pass to future generations, this may also be helpful. This is because you will be also reducing taxable assets each time you make the payments.
To complicate matters, these rules do not apply to Long Term Care. If a person is assessed for care by the local authority, they are likely to ask did you ever own your own home, and if so, what happened to it? The local authority may feel, in some cases, a house has been deliberately given away, to avoid it, being used to fund long term care. There is no clear time line in such cases, unlike the Inheritance tax rules, and they may expect the family to fund care costs if they have previously received the house.