Harold G Walker

Harold G Walker Solicitors

Your Friend-In-Law for over 77 years


Thinking of Signing Your House Over to Reduce Inheritance Tax?

Are you thinking of signing your house over to your children to reduce the value of your estate for either inheritance tax purposes or to avoid paying care home fees?

Here are a few things that should be considered before making that decision:

As a homeowner you are free to transfer your property across to your children at any point, however doing so is far from straightforward. Especially if you wish to continue living in the property.

For Inheritance Tax purposes, passing your property to your children will be known as a “potentially exempt transfer” and providing you survive for seven years from the date of the gift there will be no inheritance tax consequences for your estate. However, should you pass away within those seven years then the property would fall back into your estate for inheritance tax purposes.

Should you continue to live in the property after gifting this to your children, then this would be known as a “gift with reservation”. The house would then remain part of your estate on your death, even if you live beyond seven years. In order to avoid this then you would have to pay market rent to your children for living in their property.


Other Considerations

Another important matter to consider is you will no longer be the legal owner of the property so will have no say over what happens to this.

Also, what if your children were to be made bankrupt or were to divorce. As the property would be held in their name, it would be classed as their asset and would be taken into account by creditors or in a divorce settlement.

You must also think carefully about transferring your property to your children as the local authority may see this as a deliberate deprivation of your assets to avoid paying care home fees. If this view is taken then the local authority can include the value of the property in the test for funding.

This is just an overview of the issues that must be considered before making the decision to transfer your property. If you are thinking of taking this step or looking at ways to reduce inheritance tax then the friendly team at Harold G Walker Solicitors will be pleased to advise you further. 

The specialist Probate Team at Harold G Walker Solicitors appreciates the importance of understanding all of these issues, not just the law relating to families. For further information please contact the Probate team.