Gift with reservation

I don't know enough to advise you but it seems odd that he's taken the trouble to sign over the property to your niece but can't be bothered to make a will for what is obviously going to be a devil to sort out if he doesn't.
I'm sure you'll get some helpful advice from our Grans.

My DF has always been anything for an easy life and he won't tackle making a will because it means dealing with the problem of what to do with the house my brother lives in. DF thinks that if there is chance that either him or DM will need care in the future they will not have to contribute which may not be the case.
DH is extremely annoyed, more so than me as he pointed out DF has effectively signed most of his estate over to my niece and hasn't considered the rest of us. DH said he doesn't want anything more to do with DF until he makes some restitution. Puts me in a difficult position as my parents are in late eighties and in failing health.

I don't quite understand. You say when she gives him the money for the house? In this case it is not a GWR. It is a house purchase.

Df probably wants to make sure the property can't be seen as collateral for a nursing home. I'm not sure how that works - has he spoken with a solicitor?

He probably didn't want to choose between you and your siblings, so turned it all over to niece.

Trying to understand... The property is hers now, but she's going to pay him for it, and he's going to divide the money between himself, you & your siblings. Ok, but how can he be sure she'll pay? She may argue, "But it was a gift!" Is that why you're worried?

Also, what's to prevent her from kicking that one brother out? Perhaps df feels that with his (brother's) share of the money, he can get his own place? But that gets back to what insures that she'll pay it?

Df has a right to do what he wants with his property. He doesn't owe it to you and your siblings. It will be disappointing if you don't get anything from it or not as much as you would like, but you're not "entitled." Dh's attitude is out of line.

If he doesn't want to bother with df, he doesn't have to, of course. See df & dm without dh.

rose that does sound a very odd situation.
If your DF has done this with the intention of avoiding care home fees I don't think that would work.
Secondly if the niece sells the property after your DF and DM die, there would be capital gains tax to pay, unless she had lived in it as her main home.
Can you not persuade DF to see a solicitor or CAB advisor re making a will?

Rose From what I've read this understanding that the family will avoid care home fees differs from council to council. Councils do have the power to go after the money if care home fees are accrued and the council can prove this was done deliberately.
Please try and make your father understand that this isn't foolproof.
This info is online, show him.

Is df planning to divide the money with you and your siblings as soon as he gets it? IOWs, while he and dm are still alive? In that case, why would he need a will?

There would still be the problem of the brother who lives in one of the properties, of course. But a will wouldn't help that. Once the property is in niece's name, she can do with it as she likes, I'm sure. Perhaps she has promised df that this brother can stay there?

I was once advised that avoiding care home fees by giving something away has to be done 7 years before which obviously is to try and avoid people giving away for that very reason

The op's parents are in their 80s. If they are in reasonably good health this might work out if BlueBelle's time factor is correct. They might not avoid care home fees altogether, but their property might not be looked at for payment.

The key is for them to stay out of permanent residence in care homes for 7 years. Getting health care in their own home, if need be, might help with this.

If they're not in such good health, then that's a different story.

Worth pointing out that re giving away assets to avoid care home fees, regardless of legal or moral rights and wrongs - is emphatically not usually a simple matter of

a) you need a care home, you have assets, you pay,
Or
b) you need a care home, you don't have assets, the council pays.

Especially now, with finances so short, social workers will often avoid the care home option as long as they possibly can, even when families doing their best to care are on their knees with stress and exhaustion.

Self funding can be a 'luxury', in that you can choose the time and place, and not have to depend on the tender mercies of social services.

So what if there is capital gains tax to pay? The niece would still make a hefty profit.
It sounds as if the brother's home hasn't been given to the niece, maybe in the belief that it wouldn't count towards care home costs, as he lives there. That may be true if he has a disability.

Good point, witzend.

The Age uk leaflet about the definitive legal situation.

www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS40_deprivation_of_assets_in_the_means_test_for_care_home_provision_fcs.pdf?dtrk=true

Even if DF intends eventually to distribute the proceeds from his niece he may drop dead/be killed in an accident tomorrow. Of course he should make a will, and so should his wife.

They need wills and power of attorney arrangements in place.

Your niece sounds very on the ball, I wonder where she gets her advice from?

Do your parents have other money to leave which might even things up a bit? Maybe they think they will avoid inheritance tax in this way?

Whatever the case is, they can do as they like with their money even if they are being duped.

Starlady is a little harsh. Yes, one's property is one's own to dispose as one wishes but to disoblige your nearest and dearest after they have put in years of love, goodwill and gratitude is mean and unloving. The DF has snubbed his loving children and is letting them in for endless trouble when he has passed away.

My father divorced and married again and left his property to my step mother and she left it to her children despite promising to divide it evenly between the children of both families. I must say I had no expectations and never gave it a second thought but this post has made me think that this was a pretty rum thing to do. However, I knew my father didn't like me much so I didn't have any wild expectations.

Yet again, Gransnet has opened my eyes to the casual callousness and cruelty of ordinary people. How valuable are the kind and empathetic folks. They are like jewels in the fabric of life.

They say "where there'-s a will there's relations" but where there's no will all the relations come out of the woodwork, irrespective of how previous relationships between the parties have been. I have made a will and had 4 copies of it done so they can all know what is in it. Apart from a few specific bequests the balance will be divided amongst them but they have made it clear they won't fall out and, due to circumstances, don't expect much, for which they will have to wait until the house is sold. This may take a considerable time unfortunately.

Haven't read ft but if your DPs are in their late eighties it would be quite reasonable for the Local Authority to claim he had done it to avoid care home fees?
And you avoid inheritance tax altogether only if you live for 7 years after gifting... (crossing fingers as we have given DDs large sums 18m ago)

If no Will is made and then only the next of blood kin can apply for probate, it all sounds very messy to me, also just a thought if the brother has been living in the house for many years he will probably have some sort of rights and it could be difficult and costly getting him out. A solicitor needs to be consulted on this.

If you gift something like a house to someone else, do they own one seventh of it after Year 1, two sevenths after Year 2, etc etc?

If so, DF will still own part of the property and it won't totally belong to the niece until the end of Year 7.

This is important because if DF dies intestate, the sublings will take priority over a niece in the inheritance "pecking order".

Whilst it may be a purchase rather than a gift if the niece pays DF for its true value, I suppose that can be a private arrangement between them to avoid inheritance tax.

It's possible that because the niece is clued up, she suggested this to DF without knowing he has made no will.

Sounds to me like the Niece thinks show knows exactly what she is doing (gaining an asset she thinks will be valuable and make money from) I wonder if she has any intention of helping care for the elderly people if she gets the house > and how is this legal without a sale ? Simply 'signing it over' will not be recognised legally and would therefore mean the asset of the house is still the father's which in turn would mean it will be taken into account should he need care.

There are schemes now where a Solicitor or Probate professional will come to the house in order to make a Will ...somehow you must try to persuade him he really needs to do this .....you could tell him his wishes are not legally recognised if he does not make a Will....difficult !

Everything the father has done will be negated if there is no will. Once he dies all his estate, including the house the brother lives in will be aggregated into the estate and shared out under the laws of intestacy, which essentially, and in simplified terms, means the estate will be shared out equally between all the children of the deceased. That will probably mean the house the unemployed son lives in will have to be sold and he will have to find himself alternative housing.

As far as the 'Gift with Reservation' goes, here is a quote from a Solicitors leaflet on the subject that I found online

"If you have given away the legal title to your home but wish to continue living in the house then you have made a gift with reservation of benefit. This means that the value of the property will always come back into your estate for Inheritance Tax purposes. However for all other purposes the gift is effective. For example if the owner of the house dies it is part of their estate for Inheritance Tax purposes not withstanding that
because of the gift with reservation it is also part of your estate for inheritance tax purposes^
This sort of gift is potentially disastrous."

In other words, if your father is still living in the house when he dies, the house will still form part of his estate for inheritance tax purposes. I also think his niece is free to sell the house, even while he is still living in it, which could leave him potentially homeless

The house will also still be considered part of his assets for Care Home cost calculations unless he is paying his niece the full market rent, even then the Local Authority can claim that he gave her the house to avoid paying care home fees and they will still treat it as part of his assets

I see I misread and df only gave the house he and dm own together - live in ? - to niece. As a pp said, perhaps because he thinks brother will get to keep the house he lives in especially if he is disabled in any way.

So that means that the proceeds from the house (if niece pays up in time) will be divided between all the siblings, but this brother will also get the other house? That makes it a little messier than I thought.

Yes, even if df plans to give out that money while he and dm are alive, it's true he could die tomorrow, sorry to say. But then wouldn't it go to dm and couldn't she divide it? Is she on board with all this? I would think so but the op didn't say.

I don't think it was "harsh" or "callous" of me to say df has a right to do as he chooses. I was just stating reality. Ac shouldn't "expect" that things are going to be this way or that with their parents' money. Particularly in today's world, too many other factors can become involved like trying to keep money/property in the family and not have it all go to a care home.

Also, perhaps that's "wrong," but df probably thinks it's the "right thing to do" and has everybody's best interests at heart. If all goes as he plans, niece gets the one house, but she has to pay for it. The op and her siblings get the money for free. Sure, niece can sell the house, eventually, and make a profit, but they can invest that free money and make it grow. The only inequity seems to be brother getting a house for free. But maybe he's not getting as much/any of the money from the other house? Not a foolproof plan but, imo, df is trying to do what he thinks is best.

There is a danger that niece won't pay up by the time df and dm are sadly gone. And then I don't know if op and her siblings could get the money from her. But would a will solve that problem?

Op, are you still reading? Do you know anymore about how df plans to go about this and divvy things up? It does sound a little messier than I thought. But perhaps he is already working with a solicitor and has it all worked out? Instead of complaining and expressing annoyance, why not ask more questions? Be prepared for the possibility that he might not answer, however, which is his right, even if a little cold.

Oh, long post! Sorry!