There are several reasons to use a deed of gift to transfer a property you own to a family member.

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The first one to look at is the impact it can have on your inheritance tax (IHT) liability. There are several ways to reduce IHT; however, for most people, dealing with your family home is the major consideration as it often represents the major asset.
Everyone wants to look after their children; however, without considering the long-term consequences of your will, they may be left with a hefty bill. A simple Google search will produce lots of information on gifting property.
Is a deed of gift right for you?
The main thing to consider is the value of your total estate and the proportion your family home represents – you can work this out by obtaining a valuation. The current threshold for IHT for 2021-22 is £325,000, with the standard rate for anything over this figure currently 40 per cent. It is worth noting that the tax-free allowance has not changed since 2010-11.
If you are unlikely to exceed the threshold, it may not be worthwhile transferring the property. Also, remember that married couples can combine their allowances, meaning that £650,000 of assets can be transferred tax-free after their deaths.
Gifting a home to avoid care costs
The other major concern for many families is that the family home may have to be sold to cover care costs as the owners of the property age and become infirm.

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This is an area that needs to be treated with caution if you are thinking of state-funded care later in life. There are complex rules that apply to such a gift, with local authorities carrying out in-depth financial assessments to determine what, if any, contribution you should make to your care. They will look at any property previously owned to ensure you have not deliberately deprived yourself of assets and will examine whether you could reasonably have known that you would need care at the time of making the gift.
If you think a deed of gift is appropriate, it is possible to transfer property without money being exchanged; however, there are some criteria that apply:
– The owner must be acting of their own free will and be of sound mind.
– There must be no debts secured against the property.
– The ownership must be registered with HM Land Registry.
If your circumstances meet all the criteria, a deed of gift may be the right option; however, remember that this remains a complex process with many pitfalls and cannot be revoked unless the deed contains a clause to cover this. Tasking professional advice is strongly recommended.