Gift of Property
Thinking of making a gift of your property?
Many people consider gifting their property for various reasons. Whilst it is not possible for us to give specific advice on the underlying reasons for the gift without knowing the full circumstances, there are a number of general risks connected to gifting away your primary residence:-
Loss of Right of Occupation
The Donee of the gift could sell the property. You may find that they can remove you (and your spouse, if applicable) from your home to achieve this.
Death of the Donee
The Donee may die without making suitable provision for you in their Will. You would not have a guaranteed right to remain in the property.
Bankruptcy of the Donee
The Donee may become bankrupt in the future. The house would become part of those proceedings.
Divorce of the Donee
The Donee may get divorced in the future. The house would become part of those proceedings.
Long Term Care
If you require residential care in the future, the Local Authority will assess your capital assets. There is no guarantee that gifting your property will remove the value of your home from this assessment if it is deemed that you have intentionally deprived your estate of assets for means testing purposes.
A gift of this nature will be ineffective for Inheritance Tax purposes if you retain any benefit from the asset. If Inheritance Tax is of concern to you, it is strongly recommended that you seek specific Inheritance Tax advice which can be tailored to your individual circumstances.
Capital Gains Tax
There may be Capital Gains Tax implications for the Donee. We recommend that they seek independent legal advice in this regard as there are likely to be consequences of them owning a property which is not their principal private residence.
More sophisticated arrangements can be put in place employing the use of trusts which may protect against some of the risks mentioned above.
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