Downsizing or moving to a smaller property can be the ideal solution for older people who are looking to preserve their independence or to unlock the value of a larger home.
Whilst this can bring conflicting emotions there are also significant benefits to be enjoyed such as cheaper overheads, reduced maintenance, less restrictions on mobility and closer proximity to local services.
There may also be the option of moving in with a family member or contributing to the cost of a new multi-generational family home, or a purpose built ‘granny-annex’.
These are all sensible options but there are pitfalls which are best avoided by seeking out early expert advice.
What should you be aware of when downsizing?
Downsizing brings potential tax and estate planning consequences, such as the complexities of the new residential nil rate band. Now is the ideal time to make or review a Will, and to consider planning for any future care needs.
If moving in with family, advice should be sought as to how the property will be owned and how any financial contribution is to be treated. It is best to be absolutely clear from the outset to avoid difficulties in the event of future disagreements or unexpected changes in the circumstances of family members, such as bankruptcy or divorce. Early consideration should be given to the protection of your right to reside in a property, or how you would recover your contribution to the property if you were no longer able to live there.
If considering downsizing it is well worth speaking to a specialist solicitor with experience in tax and estate planning to guide you through the process.
For more information on tax and estate planning when downsizing or advice on creating a Will, please contact our Elderly, Care & Mental Capacity team on 0161 475 7676.