Problem With Transferring Property To Family Members
For many people their home is their only or main asset and such people are often concerned about that asset having to be sold in order to meet the costs of care. Often people seek to transfer their homes to third parties (usually their children) to avoid them being brought into assessment, and perhaps not surprisingly there are anti-avoidance rules to prevent such an arrangement being abused.
One businessman has recently found out the risks of transferring his property to his son the hard way when his son’s bankruptcy left the family’s substantial buy-to-let property portfolio exposed to his son’s creditors.
The son’s name appeared on the title deeds of numerous properties for which his father had largely paid. When the son was declared bankrupt, his creditors focused on the portfolio as a potential means of recovering what they were owed.
A judge found that a purported declaration of trust had been post-dated and that both father and son had given unreliable evidence in an attempt to protect what they viewed as family assets. The ruling meant that the portfolio formed part of the son’s property in bankruptcy and was available to his creditors.
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