Legal case highlights the implications of gifting property to children

July 7th 2023

Can I gift my house to my children? This is a question that comes up a lot in conversations with potential clients and always needs careful consideration.

In the UK, whilst you can legally gift your house to your children and still live in it, there are several tax consequences and potential risks in doing so.

Norma Gibbons and her daughter Dawn Gibbons, 52, lived in the same converted home in Earlsfield, south-west London in adjoining upstairs and downstairs flats.

In 2004 Norma transferred her upstairs flat into her daughter’s name – without even telling her – hoping to avoid inheritance tax. However, later in 2008 relations broke down between them. Following the breakdown of their relationship Norma allegedly continued to refuse access to allow maintenance of the upstairs flat and this lead to Dawn handing her an eviction notice last November.

The matter went before Judge Alan Johns KC at the county court where Norma claimed that her daughter had ‘tricked’ her into signing the flat over. Judge Johns rejected her claim, finding that Norma had willingly transferred the £600,000 flat to her daughter as a ‘gift’ to avoid inheritance tax – but without even telling Dawn she was doing so.

The case returned to court last week before Judge Gerald as Dawn sought to get her mother out of the upstairs flat and hand over the keys.

Norma fought the application and her barrister argued that she would never have transferred the flat to her daughter if she thought she could be evicted. She said Norma had always had an ‘expectation to live there for the rest of her life’ and that that must have been part of any agreement to transfer it.

Following a long legal fight, Judge Nigel Gerald ordered that Norma must leave her home of more than 40 years. The judge also ordered Norma to pay £10,000 up front on account of her daughter’s legal costs, which Dawn says amount to £28,000.

If you are looking for advice about estate planning or inheritance tax, do contact our Private Client team here who would be happy to help to find the best option for you and your family.

An 82-year-old grandmother who gave her £1.4million home to her daughter for 'inheritance tax reasons' has been evicted by a judge after their relationship broke down.