Putting our house into Trust for our Daughters

[gordmit]

Hello
My wife and I are considering to arrange for her half and my half our house ( joint ownership) to be put into a trust which would be released to our two daughters on our death.I have heard that this would avoid the possibility of a care home taking over the house to pay for our care in the event of one or both of us becomming ill. Would my daughters be liable to pay any kind of tax as a result? The house value is arround £203K. Is it possible that one of my daughters could take on a mortgage to pay the other daughter her half of the valueand then move into house?
Can you please advise if there is a website that deals with advice on this type of ownership transfer?.
Hopefully you can help. Thanks

[Peter D]

An adviser would ask many questions before giving you advice, everything from health, family history, personal estate value, etc. etc. However the Trust would attract CGT held over until your daughters inherit the house, this is based on the increase in value of the property from the start of the trust until the property is inherited. This action may be regarded by the LA as deliberate deprivation of estate particularly in the next 10 to 12 years. If they deem that, then the Trust will be ignored when carrying out the assessment. You should seek well versed professional advice on this and Property Protection Plans, remember that the LA can not claim your property if one spouse still lives in the house. Read this useful link :
http://www.carersinherts.org.uk/articles/prop_care-act.htm
Regards Peter

[gordmit]

Thanks very much Peter for your advice. I have had a quick look at the link recommended. I note the case in point is an English one whilst I am in Scotland. I wonder if the guidelines are different? Can anyone out there advise please?.
Thanks again Gordon

[dgam]

Hi Gordon,

Rules and regulations regarding care are fairly universal in the UK. However, as I understand it,
if using a lifetime discretionary trust, which I'm sure that is what you may be describing, then I do not
agree there is a tax burden to the beneficiaries (your Daughter) as the property is still inherited via the trust. In addition, if set up properly (by a Solicitor who specialises, not Will Writers), then there is a very good chance that the care problem can be offset by this process for property and capital assets up to £650,000 in value.

However if you are discussing a 'Property Protection Trust' or Will trust involving transfer of half of the asset on each parent's death (an evacuation of Title) then I believe the former post to be accurate on the care cost avoidance aspect.

Rgrds.

[Lee Young]

If you put the property in trust now and continue to live in it, perhaps reserving your right to do so, then there should not be a CGT bill after you die as the trustees will benefit from your main residence relief. Security of tenure for you and protection from your children's creditors or divorcing spouses should be ensured through the terms of the trust.

However should you be successful vis the question of care fees is that an entirely disirable position ot be in - at the mercy of the local authority as regards choice and quality of home, paid fro from dwindling revenue sources, rather than being able to afford a more confortable desirable location paid you by our own efforts?