Often we are approached by clients who are considering putting the deeds of their home into their children’s names. We assist them to carefully consider the potential legal implications of this gift before deciding to commence the process. It is important to weigh up the reasons for the transfer and the potential benefit of same against the pitfalls and legal complications that could arise.
The perceived potential financial benefits generally include saving on inheritance tax or saving the property from having to be sold to pay for care costs. It is important that you know whether this financial planning is likely to be successful. The potential risk is that you lose control over what happens to your home, you lose the ability to use it as a means of finance and ultimately you could lose the ability to live there.
If the deeds are in your name, you have full legal control over the property used as your home. Once the deeds are put in someone else’s name you no longer have legal control over what happens to the property. Even if you trust the person implicitly, there can be circumstances out of THEIR control that effect what happens to your home. Even if you reserve a Right of Residence, circumstances can arise that would mean that you end up involved in complicated legal proceedings regarding the property or possibly that you could lose your home. Please consider the following examples, often known as the “4Ds”
- DEBT. If the person who owns your home gets into financial difficulties then the property will form part of their assets which ultimately would have to be made available to their creditors to settle the debt. This might involve a forced sale of the property and your eviction.
- DIVORCE. If the person who owns your home enters divorce (or civil partnership dissolution) proceedings then the property will be taken into consideration in the division of matrimonial assets. It is worth remembering that the chances statistically of an adult needing residential care are less than one in ten but the chances of divorce are about one in three.
- DEATH. If the person who owns your home dies, the property will be part of their estate and will pass to their beneficiaries or, if they have no will , through intestacy. You should think carefully about who might own your home should this happen. They may want or need to force a sale of the property.
- DISAGREEMENT. Unfortunately it does happen that we fall out with people we love and trust. These people can be subject to outside influences and circumstances out of their control. You would be unable to reverse the transfer if you fell out with the person who owns the property and it could make your position very difficult.
If you are considering gifting property and want our assistance with weighing up the pros and cons of your decision, please get in touch with Lauren McShane on 02891811538 or 028 90 434015.
