Tenants in common, IHT, and Care home fees

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Tenants in common, IHT, and Care home fees

Postby gardenlaw » Fri Sep 03, 2010 8:40 am

The use of tenants in common arrangements grew in recent years by couples as a way of minimising inheritance tax liability.But in the Pre-Budget Report 2007, in October 2007, Chancellor Alistair Darling announced that married couples and civil partners would be able to transfer their inheritance tax allowance to each other, removing the need for them to use tenants in common arrangements.

The changes to inheritance tax meant that with immediate effect married couples and civil partners could pass on their individual £325,000 inheritance tax allowance on death - creating the ability to bequeath up to £650,000 tax-free

However, the rules do not apply to unmarried cohabiting couples or relatives living together and a tenants in common agreement could still help them pass on a property worth up to £650,000 IHT-free.

Tenants in Common is one of the few remaining vehicles to get around the taxman and reduce your inheritance tax bill.

It could also prevent you have having to sell your home if you need to go into long-term care. All you need to do is change the ownership of your home from joint names to being tenants in common. It only works if one of you dies before having to go into care, but it is well worth seeking a solicitors advice about. He will explain the very real disadvantages as well as the advantages.

It could help protect half your house value for your children if you died and your spouse remarried or a second marriage situation.
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Postby catapult1 » Fri Sep 10, 2010 2:59 pm

I was under the impression (and willing to be told otherwise) that if you purposfully did something that would inhibit the chance of paying for your care then the LA, tax man, whoever it is could still get it either by forcing a sale of property or putting a charge on it when one or both die.

added

Or by 'giving it to your children before you needed care. They can go back YEARS when deciding if it was done to mitigate care costs.

You'd still be bugged though if you both needed care....
My answers are not of a legal nature, only what I consider to be common sense.
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Postby despair » Fri Sep 10, 2010 11:04 pm

Until such time as the NHS is totally abandoned and dissolved they have no legal right to force you to pay for care since you are entitled to Continuing Care

However its a long battle to fight for it
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