Been left a house in a will !!

[Kateykrunch]

A friend of ours who is divorced has been left a house in a will. Our friend cared for her relative a number of hours each week and also lived on and off in the house as necessary to help with this care. Our friend, would now like to live in the house which would enable her to sell the family home and pay off her ex husband, but she is talking about declining the bequest and is asking for the property she has been left to be put into her 2 sons names so that they own it jointly (our friend is in her late 70's). Has anyone any experience of this that they would be willing to share on here. I was thinking that there would be a number of complications for the 2 sons in respect of things like their child tax credits as I always thought that anyone doing this would have to pay market rent and therefore the 2 boys would have the complications of unearned income which would need to be declared as I suppose in effect they would become landlords to their mother. I also feel that there may be implications if at some stage in the future our friend needed to go into a care home. Every senario that is proffered seems to bring its own complications. She wishes to move into the bequeathed house only because it has been adapted recently and more suits her age and health. Any info would be gratefully received, so thanks in advance.

[aliceBB]

There may be implications in terms of capital gains tax or inheritance tax if she gifts the property to her sons, but the issue of tax on rent will not arise if she pays no rent.

 

Why doesn't she just accept the bequest, live in it, sell the other house (or do whatever she wants to do with it), and amend her own will so that her sons inherit it when she eventually passes away?

 

Not sure how Child Tax Credits come into it...?

 

Your friend is strongly advised to talk to her solicitor before she makes any decision at all, to see which courses of action are available and in whose best interests each one is (or is not).

[tzijlstra]

Definitely a case for a good solicitor, perhaps someone like Jeffrey Shaw might be able to offer advice, he usually reads the Property section of the forum.

[Jomie]

Your friend really needs to see a solicitor because it does sound as if she and her family could get into a bit of bother if they don't do it properly. It's a good idea to sign the house over to the children because there is a risk of the family losing it if care is needed in the future. However, she needs to be aware that if her children get into debt or themselves divorce she could lose her home. Use of a property trust might be another thing to consider.

 

I seem to remember that people can be property owners and still get Child Tax Credits because it is assessed on income and outgoings. If she isn't going to pay rent that it should not be affected. If her children chose to charge rent and she needed to claim housing benefit once the ex husband is paid off, it could be rejected on grounds of contrived tenancy. It's a tough one and depends upon so many personal things so she definitely needs to discuss it with a solicitor. It will cost but the money will be well spent.

[Jeffrey Shaw]

Definitely a case for a good solicitor, perhaps someone like Jeffrey Shaw might be able to offer advice, he usually reads the Property section of the forum.

Thank you!

Yes, professional advice specific to the friend's circumstances is needed.

As to the conveyancing aspects, has the property already been assented to the friend? If not, perhaps a Deed of Variation might be of benefit in avoiding the tax consequences.

[Kateykrunch]

Thank you so much for your interesting replies, the will is currently with a solicitor its just that the 2 boys are unsure about their situation if their mother does in fact put the house into their names as they are worried about the consequences for now and in the future in respect of their responsibility and also what might happen should Mum have to go into a home or similar. The mother is obviously getting advise relevant to her situation, but the boys are not getting the advise they could do with to ensure they dont take on a possible problem. It would seem simpler that she accepts the bequest, and makes a will leaving it to her sons equally, but is that too simplistic!

[Cyclone]

That raises the potential risk that she has to sell it in the future to pay for her own care. Whereas if it the sons own it, then that can't happen (although there are other risks).

Proper advice is needed.

[Jomie]

She needs to think very carefully about putting the house into their names. This could render her homeless if either of them get into financial trouble.

 

The responsibility for the sons if they owned the house is that they should meet the cost of property repairs, insurance, annual gas safety certificate. If they don't charge rent then they will be out of pocket. They would have to pay tax (self assessment) if they decide to rent the house to her. If they choose to do this and the lady cannot afford the rent it is possible that housing benefit would be refused.

 

The care home scenario is one which worries many people but that shouldn't dominate her thinking. She needs to do what is right for her to secure a comfortable old age. The person who died and left her the house could have had this in mind when the Will was made.