WEBVTT 00:00:00.000 --> 00:00:02.100 to the channel. Today we're tackling a really 00:00:02.100 --> 00:00:04.660 important and often misunderstood topic that 00:00:04.660 --> 00:00:07.519 could have huge implications for your future 00:00:07.519 --> 00:00:11.900 and your family's financial security. The idea 00:00:11.900 --> 00:00:15.279 of handing over the deeds of your house to your 00:00:15.279 --> 00:00:19.359 children typically with the aim of either avoiding 00:00:19.359 --> 00:00:23.879 care home fees or maybe inheritance tax. Now 00:00:23.879 --> 00:00:26.399 on the surface it sounds like a clever idea doesn't 00:00:26.399 --> 00:00:29.019 it? Give the house to the kids and then it's 00:00:29.019 --> 00:00:31.500 out of your estate and you can save the fortune 00:00:31.500 --> 00:00:34.799 down the line. But I'm here to tell you that 00:00:34.799 --> 00:00:37.579 while the intention may be good, the reality 00:00:37.579 --> 00:00:41.119 can be fraught with very serious and sometimes 00:00:41.119 --> 00:00:45.560 devastating risks. And these are just minor hiccups. 00:00:45.679 --> 00:00:48.420 They could mean you lose control of your home 00:00:48.420 --> 00:00:52.600 or even lose your home entirely. So let's break 00:00:52.600 --> 00:00:56.250 down why this seemingly Smart move can be a very 00:00:56.250 --> 00:00:59.170 dangerous gamble. So the first thing we'll talk 00:00:59.170 --> 00:01:03.549 about is the deprivation of assets trap. First 00:01:03.549 --> 00:01:07.829 up, care home fees. Many people across the UK 00:01:07.829 --> 00:01:11.150 worry about the soaring costs of long -term care. 00:01:11.829 --> 00:01:14.329 The thought is, if you give away your house to 00:01:14.329 --> 00:01:17.530 local authority, can't count it when assessing 00:01:17.530 --> 00:01:21.989 your ability to pay care, right? Wrong. Now this 00:01:21.989 --> 00:01:24.849 is where the deprivation of asset rule comes 00:01:24.849 --> 00:01:28.609 in. If the local authority believes you may have 00:01:28.609 --> 00:01:32.329 deliberately given away your home to avoid care 00:01:32.329 --> 00:01:35.189 fees they can still include the value of that 00:01:35.189 --> 00:01:38.750 property in their financial assessments and they 00:01:38.750 --> 00:01:42.109 can do this retrospectively. Looking back many 00:01:42.109 --> 00:01:45.450 years typically if you transfer the asset within 00:01:45.450 --> 00:01:48.900 seven years of need and care It's a very high 00:01:48.900 --> 00:01:52.000 risk, even if it's outside the seven year window 00:01:52.000 --> 00:01:55.099 though. If the investigation shows the primary 00:01:55.099 --> 00:01:58.219 intention was to avoid care fees, they can still 00:01:58.219 --> 00:02:02.680 challenge it. This means you end up needing care 00:02:02.680 --> 00:02:07.019 with no house, no funds to pay for it. A truly 00:02:07.019 --> 00:02:12.699 awful situation. So next let's look at inheritance 00:02:12.699 --> 00:02:16.280 tax. You sell it to care fees, gifting your home 00:02:16.280 --> 00:02:19.560 with the So lame of avoiding inheritance tax 00:02:19.560 --> 00:02:22.740 also comes with a significant catch. The seven 00:02:22.740 --> 00:02:26.360 -year rule again. If you gift your property and 00:02:26.360 --> 00:02:29.300 then pass away within seven years, its value 00:02:29.300 --> 00:02:32.039 will still be considered part of your estate 00:02:32.039 --> 00:02:36.340 for inheritance tax purposes. It's called a potentially 00:02:36.340 --> 00:02:40.740 exempt transfer or a pet. If you survive those 00:02:40.740 --> 00:02:42.939 seven years, then yes, it's generally out of 00:02:42.939 --> 00:02:46.389 your estate for IHT, but that's a long time to 00:02:46.389 --> 00:02:48.849 waste, and there's no guarantees in life. Plus, 00:02:49.490 --> 00:02:52.330 during those seven years, if you continue to 00:02:52.330 --> 00:02:54.889 live in the house without paying a market rent 00:02:54.889 --> 00:02:59.030 to your children, it could be classed as a gift 00:02:59.030 --> 00:03:02.629 with reservation of benefits and still included 00:03:02.629 --> 00:03:06.229 in your state, no matter how long ago you made 00:03:06.229 --> 00:03:11.270 the transfer. Now, once you transfer those deeds, 00:03:11.650 --> 00:03:15.240 it's no longer your house. You no longer... legally 00:03:15.240 --> 00:03:18.539 own it. This means you can't sell it without 00:03:18.539 --> 00:03:21.020 your children's consent. Now what if you change 00:03:21.020 --> 00:03:24.039 your mind? What if you want to downsize or you 00:03:24.039 --> 00:03:27.620 need to release equity for your own needs? You're 00:03:27.620 --> 00:03:32.180 at the mercy of your children. You can't borrow 00:03:32.180 --> 00:03:35.680 against it. No more equity release to fund your 00:03:35.680 --> 00:03:40.120 retirement or unexpected expenses. Your children 00:03:40.120 --> 00:03:44.389 could ask you to leave. While hopefully that's 00:03:44.389 --> 00:03:47.289 unthinkable for most families, legally they could. 00:03:47.770 --> 00:03:51.289 It's their house. Now the fourth pitfall I want 00:03:51.289 --> 00:03:54.689 to talk about is your children's lives become 00:03:54.689 --> 00:03:59.289 your risks. In other words, your children's problems 00:03:59.289 --> 00:04:02.949 are your problems. And this is perhaps the most 00:04:02.949 --> 00:04:06.030 overlooked and most dangerous pitfall. When your 00:04:06.030 --> 00:04:10.259 children own your home, their financial and their 00:04:10.259 --> 00:04:13.740 personal problems become your problems. So let's 00:04:13.740 --> 00:04:16.899 talk first about divorce settlements. Now imagine 00:04:16.899 --> 00:04:21.060 your child goes through a nasty divorce. A strange 00:04:21.060 --> 00:04:26.120 spouse could lay claim to a share of your former 00:04:26.120 --> 00:04:29.180 home as part of the divorce settlement. This 00:04:29.180 --> 00:04:32.899 happens even if it's the parent's home initially. 00:04:34.019 --> 00:04:37.259 The second one is bankruptcy. Say your child 00:04:37.259 --> 00:04:39.459 has got a business and it starts to run into 00:04:39.459 --> 00:04:43.100 trouble guess what your former home is an asset 00:04:43.100 --> 00:04:46.339 that they own and it could be seized and sold 00:04:46.339 --> 00:04:51.139 to pay off creditors debt if your child gets 00:04:51.139 --> 00:04:54.199 into significant debt creditors could come after 00:04:54.199 --> 00:04:57.360 the property that you live in to recover what 00:04:57.360 --> 00:05:00.980 they're owed now what about children dying before 00:05:00.980 --> 00:05:04.949 you do The property would then form part of their 00:05:04.949 --> 00:05:08.790 estate and would pass accordingly to their will 00:05:08.790 --> 00:05:12.970 or intestincy rules if they don't have one. This 00:05:12.970 --> 00:05:16.470 might mean it goes to a son -in -law or a daughter 00:05:16.470 --> 00:05:19.350 -in -law or a grandchild rather than going back 00:05:19.350 --> 00:05:23.850 to you or another sibling. Suddenly, your carefully 00:05:23.850 --> 00:05:26.350 planned strategy to protect your home has put 00:05:26.860 --> 00:05:30.699 has put it directly in the firing line of situations 00:05:30.699 --> 00:05:34.240 that are completely beyond your control. Now 00:05:34.240 --> 00:05:37.600 pitfall five is family disputes and unforeseen 00:05:37.600 --> 00:05:41.939 circumstances. Sadly, family dynamics can change. 00:05:42.199 --> 00:05:45.160 What if your relationship with your child sours? 00:05:45.420 --> 00:05:48.329 What if... One child is given the house, the 00:05:48.329 --> 00:05:50.829 other sibling feels unfairly treated, pleading 00:05:50.829 --> 00:05:54.350 to bitter disputes. These gifts can sometimes 00:05:54.350 --> 00:05:58.449 create more problems than they solve and constrain 00:05:58.449 --> 00:06:03.649 family relationships. So what can we do? Now 00:06:03.649 --> 00:06:05.949 this isn't to say that there aren't legitimate 00:06:05.949 --> 00:06:09.050 ways to plan for your future and mitigate care 00:06:09.050 --> 00:06:11.850 home fees or inheritance tax. There are, but 00:06:11.850 --> 00:06:16.279 they're complex and they require careful professional 00:06:16.279 --> 00:06:20.120 advice. So we're talking trust here. So setting 00:06:20.120 --> 00:06:24.019 up a property and trust can be a viable option 00:06:24.019 --> 00:06:26.740 for some, and it can offer a degree of protection 00:06:26.740 --> 00:06:30.819 and control. But again, this needs expert legal 00:06:30.819 --> 00:06:34.920 advice. And there's also will to estate planning. 00:06:35.360 --> 00:06:38.680 A well -drafted will and a comprehensive estate 00:06:38.680 --> 00:06:41.699 plan are essential for everyone, regardless of 00:06:41.699 --> 00:06:45.420 property ownership. So my advice is to speak 00:06:45.420 --> 00:06:49.600 to an independent financial advisor who specializes 00:06:49.600 --> 00:06:53.500 in later life planning. They can explore all 00:06:53.500 --> 00:06:56.660 your options and help you understand the long 00:06:56.660 --> 00:07:01.399 -term implications. Now also, always consult 00:07:01.399 --> 00:07:04.420 with a solicitor who specializes in property 00:07:04.420 --> 00:07:07.920 law and elder law before you make any decisions 00:07:07.920 --> 00:07:11.540 about transferring a home. They can advise you 00:07:11.540 --> 00:07:15.160 on the specific rules and the potential pitfalls 00:07:15.160 --> 00:07:19.660 in your local area. So the bottom line is this, 00:07:20.360 --> 00:07:24.439 your home is likely your biggest asset and your 00:07:24.439 --> 00:07:28.399 greatest security. Don't risk losing it or creating 00:07:28.399 --> 00:07:31.399 unforeseen problems for yourself and your children 00:07:31.399 --> 00:07:35.759 by trying to navigate these complex legal financial 00:07:35.759 --> 00:07:40.949 waters alone. The supposed savings often come 00:07:40.949 --> 00:07:44.930 with incredibly high and often hidden risks. 00:07:45.769 --> 00:07:49.970 I hope this video has given you some food for 00:07:49.970 --> 00:07:53.269 thought and if you did find it helpful then please 00:07:53.269 --> 00:07:55.569 share it with someone else who might also benefit 00:07:55.569 --> 00:07:58.689 from watching it. And if you or somebody you 00:07:58.689 --> 00:08:00.990 know is looking at retiring in the next 12 months 00:08:00.990 --> 00:08:03.730 or so then don't forget to check out my course. 00:08:04.009 --> 00:08:07.149 It's all about the final running. to your retirement 00:08:07.149 --> 00:08:10.170 and how to make it a success. Links in the description.