Posted on: 21st January 2022
It is important to be aware that there are strict guidelines towards transfer of property ownership and giving away your assets, as any assets given away as gifts during your lifetime can be examined during a financial assessment for care.
Planning On Leaving Something Behind
If you were to die within 7 years of giving away all or part of your property, your home will end up treated as a gift and end up with inheritance tax due on some or all of its value. People have several reasons for wanting to give away property or some assets upon getting older – sometimes to their children, relatives, or close friends. The aim is typically to avoid inheritance tax or to reduce the value of assets to qualify for local authority care funding.
For a lot of people, their home is their most valuable asset, which is why it is highly considered a gift to another family member to increase the chances of state-funded care later in life.
It is easy to think transfer of property ownership to your children would reduce your asset value to better benefit your comfort in later life. However, complex rules and local authorities may take the value of your home into account when you transfer it over to someone else. This is why getting professional advice from an independent financial adviser on inheritance tax relief is required before signing anything over.
Councils will carry out financial assessments for care and will request information regarding previously-owned assets, not just ones that are owned currently. Those authorities could deem that a person has deliberately disposed of assets to increase eligibility for social care funding.
They class this as deliberate deprivation of assets which can have implications for both the person giving them and those receiving them. When determining the reason, authorities will look into the motive for the gifting, how the timing plays out against when care is needed and if the amount is significant enough to flag an investigation.
If you are currently looking into gifting assets or property to your next generation or a close relative or friend, there are some cautionary steps to take to ensure that things go smoothly. Even if your overall plan is to leave something behind for your family or for ways to reduce inheritance tax, expert advice is required to protect yourself and your intended recipient from potential struggles.
Contact the team at inheritance tax relief and ways to safely gift assets or property and avoid fees.today to discuss