Saturday 3 December 2016

Can I transfer my home into my wife's sole name - despite my unpaid debts?

John Lowe

Published 10/04/2016 | 02:30

'House-swapping is a phenomenon that has become very popular in recent years, particularly between parents and children.'
'House-swapping is a phenomenon that has become very popular in recent years, particularly between parents and children.'

I am close to retirement and currently drawing jobseeker's allowance. It is my wish to transfer ownership of my house to my wife.

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However, there are a few judgments on the house relating to money that I owe to financial institutions.

In this situation, can I transfer the house into her sole name, where she will have no liability for these debts?

Thomas, Roscommon

The short answer to your question is no. Obviously, your creditors have gone through the courts and got judgments against you in relation to monies you owe them.

They have then gone and registered these judgments against your home or, in other words, obtained a judgment mortgage on the property.

A judgment mortgage may be registered against your home - even if the debt is in your sole name and the title to the home is in the joint names of yourself and your wife (who may have absolutely no liability for the debt in question).

Normally it is necessary to obtain the consent of a spouse to allow a charge to be registered on the family home but this is not the case with a judgment mortgage.

This judgment mortgage has essentially the same effect as a conventional mortgage and therefore any dealings with the title to the property - such as transferring it into the sole name of your wife - can only be done with the consent of the holders of the judgment mortgages. And I would think that this consent is unlikely to be given.

My mother is likely to need nursing home care before the end of the year. My father passed away a few years ago. As a family, we don't have much savings in place to cover the cost of nursing home care, so we are considering going for the Fair Deal scheme.

My mother's only asset of any value is the family home - and so it is this which she is considering using to fund the cost of nursing home care.

I understand that if you spend more than three years in a home, no more than 22.5 per cent of the value of your family home can be used to pay for your care. Is that correct?

And if my mother dies within three years of entering the home, will the full 22.5pc of the value of the family home be used to fund the cost of nursing home care - or will the percentage of the value of the home that is used to fund the cost of the care be based simply on the length of time that she was in the home?

Kathleen, Clonmel, Co Tipperary

The Nursing Homes Support Scheme, also known as the Fair Deal, provides financial support to people who need long-term nursing home care. The scheme is operated by the HSE.

Under this scheme, you make a contribution towards the cost of your care and the State pays the balance. The scheme covers approved private nursing homes, voluntary nursing homes and public nursing homes.

The contributions that an individual availing of the Fair Deal scheme must make are as follows: 80pc of their income (less certain deductions) and 7.5pc of the value of any assets each year (with the first €36,000 of asset value disregarded in calculating what is due).

If there is a family home included in the assets, it will only be included in the financial assessment for the first three years of your time in care. This is known as the 22.5pc or "three-year cap".

It means that you will pay a 7.5pc contribution based on your principal residence for a maximum of three years - regardless of the length of time you spend in nursing home care. In other words, the individual's contribution to the cost of their care is limited to the time they receive this care.

My son and I wish to swap houses. Both houses are worth about €240,000. There is no mortgage on my house but there is on my son's house.

My son has two other properties which are rented out and also have mortgages. What are the legal and financial implications of this situation?

John, Lusk, Co Dublin

House-swapping is a phenomenon that has become very popular in recent years, particularly between parents and children. At a time when the house market was very sluggish, it offered an opportunity to people wanting to move to do a deal with similarly minded people.

Obviously, there are a number of factors to be taken into account, not least the legal requirements, and you should consult with your financial adviser and your solicitors to have the full ramifications explained to you. In general terms, even in a case where there is a direct house swap with no cash adjustment, both transactions will be subject to stamp duty at 1pc.

In your particular circumstances, the fact that your son has a mortgage on his home will be a complicating factor. He won't be able to switch his existing home mortgage over to your house but will have to apply for a new mortgage and go through the whole process as if he were starting from scratch.

The new Central Bank guidelines will now apply - that is, your son can borrow no more than 80pc of the value of the home (as he's not a first-time buyer) and he will only be allowed borrow up to three-and-a-half times income.

The mortgages he has on the rental properties won't necessarily pose a problem as long as he has no arrears on any of the three mortgages.

However, it may still have a bearing on his borrowing eligibility, even if the rental income generated more than covers the mortgage repayments and costs.

Applying for a new mortgage will mean getting valuations on all properties and for your son will entail all the legal and other costs that accrue from securing a mortgage.

Apart from taking legal advice, your son should first discuss with his financial adviser or lender the feasibility of securing the new mortgage before you go ahead with this swap.

I am trying to find out if I will qualify for a full State pension.

I started working at the age of 17 in July 1977, paying full contributions until April 1993. I then moved to the US - but moved back to Ireland in April 2013.

I am working full-time since June 2013 for the same company. I am now 56 years old. I qualify for a reduced US social security payment at 62 years old - though not enough to retire on.

If I stop working at 62 years old, will I qualify for the Irish State pension at 66 - or a reduced State pension? If not and I need to work till I am 65 or 66, would that give me the full pension?

Sean, Tralee, Co Kerry

The Social Welfare and Pensions Act 2011 made a number of changes to the qualifying age for State pensions. The qualifying age will rise to 67 in 2021 and 68 in 2028. So if you were born on or after January 1, 1955, the minimum qualifying State pension age will be 67; and if you were born on or after January 1, 1961, the minimum qualifying State pension age will be 68.

Therefore, as you were born after January 1, 1955, you will not qualify for the State Pension until you reach 67. The National Pensions Framework made changes which will come into effect in 2020 but the necessary enabling legislation has not yet been passed. When and if this is in place, your entitlement will be as follows.

If you were born after January 1, 1954, when you reach pension age you will need a total of 30 years' contributions and/or credits to get the maximum State pension. You will be able to get the minimum State pension if you have paid 520 full-rate contributions (the equivalent of 10 full years' contributions).

The minimum pension will be one-third of the maximum rate. You can then get a further one-thirtieth of the pension for each additional year of contributions that you have.

The maximum number of credits that can be used in calculating your entitlement to State Pension will be 520 (or 10 years).

So, even if you continue working or signing on for credits until the age of 67, you will still have less than the 30 years' contributions needed to qualify for a full pension.

Email your questions to lmcbride@independent.ie or write to 'Your Questions, The Sunday Independent Business Section, 27-32 Talbot Street, Dublin 1'.

While we will endeavour to place your questions with the most appropriate expert to answer your query, this column is a reader service and is not intended to replace professional advice.

Author of The Money Doctor 2016

http://independentfinancialadvice.ie/ and @themoneydoc

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