Ian
This is tax neutral. The 'agreement' mean has the result that the parent retains a benefit and therefore the 'gifts with reservation of benefit' rules would mean that the gift would be disregarded for inheritance tax purposes and so would continue to form part of the parent's estate.
There are plently of simple and effective methods of mitigating inheritance tax. Professional advice should be should as most DIY solutions either fail or have adverse tax consequences.
If you require any further assistance please do not hesitate to contact us, and we will be happy to act on your behalf.
Nigel Lord
Lord Associates
Taxation & Business Consultants
102 Smarts Lane
Loughton
Essex, IG10 4BS
020 8508 1642 & 07769 931852
lordassociates@ntlworld.com