As I read through the quotes in this story, particularly from the son, I could feel my facial expression going from shock to horror, and it reminded me of a quote from good old Lord Denning on family values. Denning said; “There is a prevailing philosophy of `anything goes’ and the strength of family life is being eroded.” I think his quote was meant for stories like this, and that England’s great, and somewhat controversial, judge, could see well into the sad future of family values in this country.
Alas nowadays the theme to this story is all too common. Family values, it seems, appear to be eroding as rapidly as the coastline at Birling Gap.
Whilst the story is silent as to the pensioner’s motive behind the transfer of the property to his son, it seems likely on the face of it that it may have been a move to mitigate a future inheritance tax hit for his children, or perhaps, as the story suggests, to avoid the risk of the local authority grabbing a share of it to pay for care fees at some time down the line. The latter point being contentious in its own right and anyone considering such a move ought to take immediate legal advice, but that’s a story for another day.
I often discuss ‘gifting’ when considering measures to mitigate future inheritance tax charges with clients, and any such measure always comes with a big fat caveat attached to it, ‘Never, ever, give something away unless you are absolutely sure you no longer need it. Once it’s gone, it’s gone forever’.
People reading this gloomy story might think that this kind of situation could never happen to them. They trust their children unreservedly and they wouldn’t do that sort of thing. I’m sure Neville Paull thought exactly that when he transferred his property to his son Bradley.
There are sensible measures one can take when planning for inheritance tax mitigation, and it’s imperative that independent legal advice is sought before doing anything. The desire to reduce any tax burden is understandable, but one has to consider at what cost, and particularly if that cost is higher than the tax charge itself. How much does having nowhere to live cost?
Whereas in a Will the testator, (the person making the Will), can give their surviving spouse, or indeed any other person, a life interest in their share of their property when they die whilst at the same time gifting it to their children, so situations like the Paull’s are avoided, it isn’t quite as straight forward when gifting during your lifetime. If you gift a property while you’re alive but continue to live in it, rent free, then the gift carries with it a reservation of benefit – that benefit being that you still live in the property, and therefore the commonly known ‘7 year rule’ does not apply all the time that you continue to take that benefit. You could pay a market rent, but then you’re only protection is that of the rent agreement and when that comes to an end it’s game over if the ‘landlord’ wants his property back.
No doubt the only true winners in the sad saga will be the lawyers.
Don’t leave things to chance, get sound legal advice and make sure you are protected.
This information provided in this article is not intended to constitute legal advice and each relationship breakdown requires careful consideration in our view by a fully qualified Solicitor before decisions are made and before you embark on a certain course of action.
Penn Chambers Solicitors
0207 183 1485