Implications of Gifting a % of Property

[Claymore]

Hi

My main residence is unencumbered. I am thinking ahead (with the thought of the 7 year rule on inheritance tax).

If I gift my son 50% of my property now - would I still be OK to live in the house?

Would there be any immediate tax consequences of gifting him 50% now? My son is nearly 21.

Many thanks
Claymore

[jpkeates]

If you gift land to your son and continue to live there, it's a "gift with reservation" and remains part of your estate for tax purposes.
There's an exception if you pay your son market rate rent, or you both live in the property together.

If you want to pass the property to your son while living there without them or paying rent, you need some kind of trust to pass the property into to work past the reservation.

[Claymore]

Thanks JP. I am thinking of gifting him 50%, he will still be living with me for a few years.

My biggest concern is that if he marries and then divorces etc - how that would affect me!

[jpkeates]

That's another reason to use a trust,
The trust becomes the beneficial owner of the property, so it moves out of your estate for income tax purposes (over seven years).

You and your son would be the beneficiaries of the trust, so should anything happen to either of you, the trust would cease to have a purpose and the survivor would be able to own all of it.
The additional benefit is that the trust also prevents any of your hard earned wealth leaving the family as a result of a divorce, rash gift, badly worded will, substance or gambling addiction on the part of your son (who I am sure wouldn't seem likely to do any of these things, but it happens).
It also protects your son from the same events befalling you.

You need proper legal advice here, though, ideally with your son present.
It's bog-standard family solicitor stuff - and they'll also be able to make sure your wills are sympathetic to the arrangement.

[Claymore]

jpkeates,

That's lovely, thank you so much!