Gifting the family home

Your home is your most important asset and often your most valuable. You should think carefully before making a gift of your home.

Assuming that you have considered all of the issues and you wish to proceed with a gift of your home then you can either make an outright gift or you can make the gift to a trust.

A trust is a legal relationship, the details of which are set out in a trust deed. The trust assets (which will be your home) are held by trustees for the benefit of the beneficiaries specified in the trust deed.

You will be one of the beneficiaries, which means you will be able to guarantee your right of occupation for as long as you wish. The trustees will become the legal owners of the property and the title of the property will be transferred into their names.

The purpose of the gift will usually be to provide a benefit for the person you are giving the property to because they are providing, in return, a benefit to you. For example, it may be that a child has made a financial contribution such as improvements to your home, your child may be providing care to you, or your child may agree to take on the financial responsibility for your house (eg insurance, upkeep, repairs, maintenance) in order that you can remain in the property should you not otherwise be able to afford to do so.

Your child may agree to take over the paperwork relating to property ownership because it is becoming too much for you to deal with. It might also be that you want to avoid any delays when you die and the trust will mean that the property could be sold before a grant of probate is obtained.

However, even if any of the above apply, you would still wish to ensure you had a right of occupation and a trust can provide this for you.

If you make an outright gift then there is the risk that your children may view your home as a lump sum and be tempted, or be influenced by third parties, to try to realise the capital by whatever means. They could fall into financial difficulties of their own or become entitled to means tested benefits which would be affected by property ownership.

It is important to consider what would happen should they die before you, become divorced or bankrupt. The taxation position is important to consider as your children may have a capital gains tax liability on the sale of the property.

A trust protects against these and other issues.