This is a question that we are now frequently asked. With the possible introduction of significantly higher probate fees in May, it is likely that this will become an even more popular question.
The significant increase in probate fees for some estates means that people are looking at ways to avoid the charges.
Probate fees aside, sometimes people simply wish to alleviate themselves of the worry and responsibility of owning/looking after a property. This may sound like a great idea in theory, but there are some very important considerations. Transferring your property to your intended beneficiaries during your lifetime is not a decision that should be taken lightly and here are some things to bear in mind.
If the intention is to continue living in the property, then any transfer should almost certainly be accompanied by some form of trust deed in order to protect your right to occupy and potentially also a restriction on the title.
Loss of control
Perhaps the most important thing to consider is loss of control. By transferring the property it is no longer legally yours. You can no longer deal with the property as legal owner. You would not (for example) be able to mortgage the property or sell the property without the agreement of the new owners.
In transferring the property to third parties, the property becomes part of their own assets. What happens if they go through a divorce? What happens if they become bankrupt?
Some people often wish to give their home away to reduce their estate for inheritance tax purposes. If you are still living in the property, or indeed have a right to be living in the property at the date of death then there is likely to be no inheritance tax benefit gained in transferring the property, as for inheritance tax purposes the property is still treated as part of the value of your estate. This is referred to as a ‘gift with reservation of benefit’.
Some people wish to transfer the property to their children in the hope that this will avoid the need to pay care fees. There is a possibility that the Local Authority will look into why you have disposed of your house. If they feel that you have disposed of an asset with a view to avoiding payment of care fees then they may well treat you as still owning the asset when making their financial assessment. This is referred to as ‘deliberate deprivation of assets’.
Capital Gains Tax
One further point to note is that there may be a Capital Gains Tax consequence to transferring the property, although this is usually more a problem for the recipient of the property to consider.
The above is not an exhaustive list. The decision as to whether to transfer your property is complex and all parties involved should always seek independent legal advice.
- Will drafting
- Review of existing Wills
- Advice re provision for children, second families, spouses and civil partners, unmarried partners and other family members
- Advice re charitable gifts
- Advice re foreign and business assets
- Advice re Will trusts
- Inheritance Tax advice
- Advice re Trust creation and ongoing management
- Preparation of trust deeds and other trust documentation
- Declarations of Trust
- Termination of trusts
Probate and Administration of Estates
- Advice re the terms of the Will or intestacy rules where there is no Will
- Obtaining values for the various assets and liabilities in the estate, notifying the various institutions and obtaining all necessary estate information
- Obtaining a grant of probate or letters of administration as appropriate
- Dealing with and advice re Inheritance Tax, Capital Gains Tax and Income Tax, liaising with HMRC
- Notifying and liaising with the beneficiaries of the estate
- Preparing a deed of variation or a deed of disclaimer in relation to the estate
- Selling or transferring the various assets due to the beneficiaries
- Dealing with foreign assets and Wills
- Advice re estate disputes and claims against an estate
“If it had not been for the EPA I would have had real problems even discussing my mother’s affairs with banks, investment companies, government departments and care providers, much less paying her bills from her account.
“Being able to supply copies of the EPA to the various parties meant they would speak to me and act on my instructions. Without it I would have had to pursue a long, complicated and expensive legal process – at a very difficult time personally.
“I would absolutely recommend planning ahead and making an LPA. It could make a huge difference to your loved ones.”
"We have now received all of the information for the deputyship. We are delighted with the outcome. I would like to take the opportunity to say thank you for your work and support. It was a difficult thing for us due to the circumstances, but you made it easy and that really helped.
Thank you also for the settlement of the account, we are very grateful. I have friends who have Autistic children and adults I will recommend you in the future".