Property Deeds of Gift
A Deed of Gift helps you gift your property to loved ones or family members, such as your children. When executed correctly and in the right circumstances, this can be a tax-efficient way to pass your property on to your children as it may reduce their Inheritance Tax liabilities after your death.
Our specialist team advises clients in different languages on a wide range of legal matters. Call them on 0208 1111 911 or contact them through the website to discuss your circumstances with them.
What do I need to consider when creating a Deed of Gift for my property?
Gifting your property to someone else relies on an extremely high level of trust. You may feel very confident that there won’t be an issue, but it’s important that you know the potential seriousness of any family disputes after you gift your property to them. You could effectively find yourself living in their property after gifting it to them.
You must also consider what happens to your house if one or more of your children unexpectedly die before you. The house (or their share of it) would effectively form part of their estate, so their beneficiaries could be entitled to inherit it, rather than the property returning to you.
What are the benefits of gifting my property through a Deed of Gift?
Many people gift property to their children in later life, once they have paid off their mortgage and own the property outright. Inheritance Tax is often the reason people choose to do this and it can also save time and paperwork after your death, as the Probate and Estates Administration process can be very lengthy.
It is important to execute Deeds of Gift carefully and legal advice can help you ensure that you don’t undermine your reasons for gifting the property. For example:
- You can help reduce the Inheritance Tax your beneficiaries pay after your death. However, you need to do so at least 7 years before your death. If you wish to still live in the property in the meantime, you may also need to pay your children rent at the market rate. Failure to comply with these rules could leave your children still liable to pay Inheritance Tax.
- If you are also looking to reduce your assets to improve your chances of receiving funding for care home fees in future, this also comes with risks. You should be aware that local authorities sometimes look into any deeds of gift and may issue charges against the property (entitling them to a percentage of the proceeds of a future sale).
As these points demonstrate, a Deed of Gift can be effective but does come with an element of risk. You must plan it carefully to cover a wide range of eventualities and be aware of the potential pitfalls if events don’t turn out as you expected. This is where specialist legal advice can be very beneficial.
What other legal advice might I need?
If you’re looking into a Deed of Gift, you may also want to consider Will Writing (if you don’t already have a will) or a Lasting Power of Attorney to enable your family to make decisions on your behalf if you lose the mental capacity to make such decisions for yourself in future.
Your children or beneficiaries might also need advice on Probate & Estates Administration after your death, or on Residential Conveyancing if they choose to sell the property in future.
How do I get legal advice on Deeds of Gift?
Call us on 0208 1111 911 or contact us through the website and we’ll arrange a time to discuss your circumstances thoroughly with you. The initial call is free and we’ll advise you of our fees before you decide whether or not to instruct us.