I've been going along OK in my joint IVA for 20 months now. We have an equity release clause on our property for year 5.
I have never told my parents about our predicament as I know they would be mortified.
The problem is although they are in good health now, (both in late 60s) they keep mentioning about signing their house to myself and my son, so if they need to go into care in years to come they won't need to sell their home.
I keep changing the subject saying they've got years left. I am an only child and so is my son, he is 14.
I can only imagine that if this was to go ahead 50% of the equity would be liable for the IVA. Also at 14 can a minor have a property in his name.
Also, is this loophole allowed. It is money that would have been due to go to the state.
The house is worth approx £250k
If I do have any equity in my own house I would imagine would not be a huge amount.
Can anyone help answer my questions?
Thanks Carrie
Last edited by carrie on Wed Mar 02, 2011 5:32 pm, edited 1 time in total.
I have no idea on this I'm afraid. Hopefully one of the experts will be along to help later.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
I think if the house is signed over then your parents will be expected to pay you rent to live in it.Some one I know did this and their mother has to pay a reasonable rent.
If that happens then I imagine you would be expected to pay this rent across to the IVA.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Thanks Carole.
But I'm a bit confused. Were they in an IVA and was the money to go towards the IVA?
Obviously, if my parents persue this more and the property would become part of my IVA I would have to bite the bullet and tell them why I don't want them to do this.
I just know something is going to rear it's head at some point and I'll have to come clean. Sometimes I feel like doing this, but I know every part of our lives will be under their scrutiny.
I can hear it now " How can you afford fish and chips? Is that glass of wine in your budget?" " Why aren't you wearing your sack cloth and ashes today?"
Sorry, I guess you have to know my mother to appreciate that, and I wouldn't wish that on you all.
It's probably much worse than that though Jan if there is a windfall clause then potentially any equity may have to be released and paid across to the IVA.
I'd steer them well away from signing the house over if I were you.
We're willing to wipe the slate clean, give you a fresh start. All that we're asking in return is your cooperation.
The money would not be due to the "state" but used toward Nursing home care, but that would mean both your parents would have to be in long term care at the same time. If only one was in care the Socal services would not be able to access the money on the house due to the other partner living there.
Any transfer of property to you, on selling would be subject to taxes.
On a lighter note - only a small minority of people end up in long term care. so whilst its nice your parents worrying about you - it sounds like they have many years left
I am a Community Occupational Therapist and a good lot of my clients have signed their homes over to their parents for the same reason that your parents want to. It has to take place a number of years before they go into care so it is prudent of them to think of it now! If they keep insisting on it and you cant put them off the idea, you may have to tell them about the IVA. It would be a disaster if they signed it over to you and it was considered a windfall in your IVA!!! Someone in an earlier post mentioned that you would have to pay tax but I am not sure that is actually accurate.
Hi there. As long as a decent time passes between the transfer and parents demise it should be OK from inheritance tax point of view. I do believe, though, that there is a requirement that no "tenancy for life" clause is inserted.
Have you considered asking if your parents could set up a trust for your son and transfer the property into that trust. It would need some expert legal advice though. In this way you might be able to sidestep the IVA question, as the property would eventually be your son's anyway, and you have your own so don't need it to live in. So, hopefully, your parents won't be suspicious of this request.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014
If your parents do sign their house over to you and your son, it would be seen as a windfall as far as your IVA was concerned. As such the best advice is to avoid this. Ultimately if this means talking to them about your IVA I feel that this is what you are going to have to do.
Thanks for all the advice. I think if I can keep them at bay until post IVA we will revisit the options then. I do think though that if they knew of the IVA they may bypass myself and just pass the house to my son.
I wouldn't like to comment on how you go about the property transfer as it sounds rather more complex than I'm equiped to deal with!
It may be best to seek independant financial advice and/or legal advice...for your IP to act in your best interests may compromise their position regards acting for creditors if your best interest is putting the house in trust for your son to avoid paying anything across to the iva.
I hope a couple more experts will come along and comment. xx
