My mother and father in law are thinking of transferring their house deeds into my husbands and their daughters names (their children), They would continue to live in the house so we could not sell it whilst they were still alive. Me and my husband are in a interlocking IVA and his parents do not know we are in this situation.
Can anyone provide any advice relating to this kind of situation. Is it even possible to do with us being in an IVA? Would the creditors allow it? What checks would be carried out etc. I am not sure how we could get out of it if its something they want to do without coming clean about the IVA.
Hopefully one of the Industry Experts could clarify on Monday --- but my thoughts are that if the transfer deed stipulates that they are unable to sell the house until such time as both parents have passed then it wouldn't be touched by the IVA. However,if the intention for this transfer is to frustrate care fees and the like later on then such a stipulation would, I believe, counter this intention.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
Sorry I am not sure what you mean by the intention for the transfer to frustrate care fees then it would counter the intention. Please can you clarify.
I believe the reason for this is so their children don't have to go through all the hassle of gaining ownership of the property as they don't have a will and want to do this instead.
Regards
sosilly
Hopefully one of the Industry Experts could clarify on Monday --- but my thoughts are that if the transfer deed stipulates that they are unable to sell the house until such time as both parents have passed then it wouldn't be touched by the IVA. However,if the intention for this transfer is to frustrate care fees and the like later on then such a stipulation would, I believe, counter this intention.
Usually such a transfer is done so that the parents are not "home owners" and, should they go into care, the authorities cannot force a sale to fund such care. It is also used to attempt to reduce inheritance tax. However, these would only work if the transfer is free from such conditions as the parents can live there for life --- as far as I am awars ( it has been over a decade since I dabbled in such things and these things do change).
To be honest, if the intention is simply to alleviate hassle a correctly drawn will would be far simpler. I have recently acted as Executor in my father's estate and property ownership transfer borders on the automatic !
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
I think you need specialist legal advice but it does sound like a will might help - if the transfer is done early it might avoid inheritance tax if done properly but again take specialist legal advice. Also inheritance tax might not kick in depending on the value of the property.
Last edited by Lisa Thomas on Mon May 15, 2017 3:02 pm, edited 1 time in total.
Your parents in law can do what they like as it is their property and they are not in IVAs. However they need to be very careful and should get independent legal advice as this could be deemed a gift and potential windfall. Even if there is a condition that they must live there until death it would still have a value and could be sold at auction. Essentially a purchaser would be taking a bet on how long they would live and any potential uplift in value before they decided how much to pay for it.
I agree with Foggy that a will may be much simpler but again ensure that the property is protected in the event that they die during your IVAs.
So it would only if they both passed away before our IVA's finished that the proceeds of the house would need to be paid into the IVA
Regards
Sosilly
No .... once you are on the title deeds you are one of the owners and creditors could go after your share by equity release or extension of the IVA. The tenancy for life clause would have no real effect, unless the property was put into trust and, so, owned by the trust, not you.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
Could I just ask how the creditors would find out about it, would the IP do a check to see what house properties are in our name with the land registry or something?
It is unlikely that the IP would carry out extended searches but the solicitor handling the transaction may do so. This could then cause embarrassment and problems.
It is entirely possible that this could sneak by, unnoticed. But, my experiences in this and similar fields suggest otherwise --- things really do have a habit of coming out of the woodwork at inconvenient times !!
As Michael said, the solicitor might check, also HMRC, who handle the stamping of the transfer will add you to their database as a homeowner which can flag you up for anything tax related -- in the longer term, capital gains if the house is sold to pay for care, for instance, or, ultimately, inheritance tax and probate.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
Michael when you say the solicitor handling the transaction may do a search, do you mean the solicitor who my husbands parents get to handle the transfer of deeds over to my husbands and his sisters names? No solicitor is required at equity release time is there?
Foggy you mention HMRC which can flag my husband up for anything tax related, what effect would this have on the IVA and I wondered if you would mind explaining what you mean by capital gains if the house is sold to pay for care which it wouldn't do if it wasn't in my husbands parents name any longer would it
and what effect in transferring the names over would this have on inheritance tax and probate. Sorry for all the questions this is just an area out of my knowledge so just want to be clear.
As I have previously said my husbands parents don't know about the situation we are in and it would be embarrassing for us to have to explain to them the mess we got ourselves into so would still like to keep this just between ourselves.
I agree a will would be a much simpler process all round which we are going to speak to them about.
Although, if the house is no longer in their names, it wouldn't have to be sold to pay for care (unless the local authority seek to overturn the transfer), if you chose to sell it to, for instance, fund care privately it could be subject to CGT, not being the owners main or sole residence. When you apply for Probate you deal with Inheritance tax on the same forms and, until HMRC are happy Probate is not granted usually. Again, HMRC can ( and do at times ) challenge the transfer if they think it was done to reduce the estate under the tax thresholds and it can be overturned by the courts. Usually the longer between transfer and probate the better ... but, when I used to have dealings with such matters ( many, many years ago, so all could have changed) a clause giving the parents a lifetime tenancy was sufficient to cast doubt on the reasons for the transfer, as there is no other real benefit to such a transaction.
If you go down the will route ask the solicitor to include an insolvency clause .. which basically (and simply put) puts any inheritance in trust and out of the reach of any beneficiary whilst he / she is insolvent. So as they cannot inherit while in an IVA, the IVA has no call on it and the trust releases it when the insolvent comes out of the IVA.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
