18 July 2013
What to consider if you are thinking of ‘gifting' your home
Recently in the land of Soaps, Coronation Street’s Emily Bishop expressed her desire to gift her home to Norris Cole so that in the event of her death Norris would be able to continue to reside in the property. Although Emily may be acting with good intentions, there are a number of risks associated with such arrangements.
Anyone considering gifting property, particularly their primary residence, should take specific legal advice before doing so. While the recipients may be trusted family members, there is every chance that the maker of the gift could find themselves homeless.
Unforeseen circumstances like the death, marriage, divorce or bankruptcy of the donee could result in the original owner of the property being left in an unprotected position with no enforceable right to remain in their home.
Some common reasons for these gifts are concerns about the cost of future care and saving on Inheritance Tax. Gifting property to someone else but continuing to live in it is ineffective for Inheritance Tax purposes. With regard to the avoidance of care costs, there is a chance the Local Authority will deem the gift an ‘intentional deprivation’ which can result in them including the value of the gifted property in the assessment of your capital assets anyway.
Even if Emily happily lives the rest of her days at number 3, Coronation Street, she is losing control over who will ultimately benefit from her estate that will become Norris’ decision. With the correct advice, people in Emily’s situation can put an appropriate Will in place, leave their ‘Norris’ flexible rights to remain in the property and still ensure the value of the property will eventually go to their chosen beneficiaries.
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