Pay off mortgage?
Discussion
I think ( finally) that my house is sold and should complete in about 4 weeks. I am not sure whether to settle the mortgage or bank the cash and keep the mortgage running for reasons which will become apparent.
Three years ago we moved in with the in-laws to help look after the mother in law, but she sadly passed away last year. My wife gave up work to do that. Now we live with my father in law who owns 50% of the house we live in. My wife and I own the other 50% and we have a joint mortgage worth about £80k less than the value of the house we are about to sell.
The obvious thing is to pay off the mortgage with our new cash but I am slightly worried about the implications then if the father in law ends up in residential care and he is seen to own 50% of the house, have £100k in cash in the bank and no mortgage. At the moment his 50% obligation on the mortgage matches his savings so in net worth his assets are just the house. If I settle the mortgage he will have 3100k cash with no obligations which I am sure would be first port of call for the council if he needed residential care.
We currently have an offset mortgage and our combined savings are more than the mortgage, so in effect we are only paying off the capital each month.
Thoughts?
Three years ago we moved in with the in-laws to help look after the mother in law, but she sadly passed away last year. My wife gave up work to do that. Now we live with my father in law who owns 50% of the house we live in. My wife and I own the other 50% and we have a joint mortgage worth about £80k less than the value of the house we are about to sell.
The obvious thing is to pay off the mortgage with our new cash but I am slightly worried about the implications then if the father in law ends up in residential care and he is seen to own 50% of the house, have £100k in cash in the bank and no mortgage. At the moment his 50% obligation on the mortgage matches his savings so in net worth his assets are just the house. If I settle the mortgage he will have 3100k cash with no obligations which I am sure would be first port of call for the council if he needed residential care.
We currently have an offset mortgage and our combined savings are more than the mortgage, so in effect we are only paying off the capital each month.
Thoughts?
I don't get it either. Paying off which mortgage if your selling the house?
Why should the FIL need residential care if your living there? You can provide the care with nurses coming to the house if need be this I understand is the preferred option now stay in your own place for as long as possible.
Why should the FIL need residential care if your living there? You can provide the care with nurses coming to the house if need be this I understand is the preferred option now stay in your own place for as long as possible.
BoRED S2upid said:
I don't get it either. Paying off which mortgage if your selling the house?
Why should the FIL need residential care if your living there? You can provide the care with nurses coming to the house if need be this I understand is the preferred option now stay in your own place for as long as possible.
It's not always that simple, for example the FIL could lose mobility and there may not be a toilet downstairs, the shower may not be accessible for someone with restricted mobility etc. There are many examples where despite all of this the FIL could need residential care.Why should the FIL need residential care if your living there? You can provide the care with nurses coming to the house if need be this I understand is the preferred option now stay in your own place for as long as possible.
otherman said:
You want the rest of us to pay for his care, instead of your own family doing it, by conning the bank, and trying to keep the house money for yourself. You do know that government money comes from taxpayers, right?
There are 2 sides to this. Many people would rather not take the care at that cost but they have no choice as they are deemed to need it. Personally if it was me I would rather be given a couple of pills like the vet would do to my cats in the same position, and then pass my inheritance on to my kids but the government doesn't allow this so I would absolutely rather protect everything I worked my whole life for to make my kids lives easier.http://www.ageuk.org.uk/Documents/EN-GB/Factsheets...
This link will help you understand the rules about attempts to hit the state with care costs which the individual could have contributed towards themselves. Key extracts below,
"deprivation of assets is where a person has intentionally deprived or decreased their overall assets in order to reduce the amount they will be charged towards their care and support.
"If a local authority arranges for you to enter a care home on a permanent basis you will generally be financially assessed using a means test.
"Deliberate deprivation occurs when an individual transfers an asset out of his or her possession to put him or herself in a better position regarding the means test for care home accommodation (or to claim social security benefits).
"Where the person has transferred the asset to a third party, the third party is liable to pay the local authority the difference between what it would have charged and did charge the person receiving care at the time of the means test."
This link will help you understand the rules about attempts to hit the state with care costs which the individual could have contributed towards themselves. Key extracts below,
"deprivation of assets is where a person has intentionally deprived or decreased their overall assets in order to reduce the amount they will be charged towards their care and support.
"If a local authority arranges for you to enter a care home on a permanent basis you will generally be financially assessed using a means test.
"Deliberate deprivation occurs when an individual transfers an asset out of his or her possession to put him or herself in a better position regarding the means test for care home accommodation (or to claim social security benefits).
"Where the person has transferred the asset to a third party, the third party is liable to pay the local authority the difference between what it would have charged and did charge the person receiving care at the time of the means test."
Ozzie Osmond said:
http://www.ageuk.org.uk/Documents/EN-GB/Factsheets...
This link will help you understand the rules about attempts to hit the state with care costs which the individual could have contributed towards themselves. Key extracts below,
"deprivation of assets is where a person has intentionally deprived or decreased their overall assets in order to reduce the amount they will be charged towards their care and support.
"If a local authority arranges for you to enter a care home on a permanent basis you will generally be financially assessed using a means test.
"Deliberate deprivation occurs when an individual transfers an asset out of his or her possession to put him or herself in a better position regarding the means test for care home accommodation (or to claim social security benefits).
"Where the person has transferred the asset to a third party, the third party is liable to pay the local authority the difference between what it would have charged and did charge the person receiving care at the time of the means test."
What timeframe though?This link will help you understand the rules about attempts to hit the state with care costs which the individual could have contributed towards themselves. Key extracts below,
"deprivation of assets is where a person has intentionally deprived or decreased their overall assets in order to reduce the amount they will be charged towards their care and support.
"If a local authority arranges for you to enter a care home on a permanent basis you will generally be financially assessed using a means test.
"Deliberate deprivation occurs when an individual transfers an asset out of his or her possession to put him or herself in a better position regarding the means test for care home accommodation (or to claim social security benefits).
"Where the person has transferred the asset to a third party, the third party is liable to pay the local authority the difference between what it would have charged and did charge the person receiving care at the time of the means test."
There is no mortgage on the house we are selling, we live with the father in law in a house we bought between us with some of his capital, some of ours and a mortgage making up the difference. the house we n ow have is adapted for disabled living whereas their old house had stairs.
I get the moral indignation that I am somehow trying to avoid care home charges but on paper he has 50% in the house and if I pay the mortgage off it looks like he has a 50% share in a house with £200K less on the mortgage. His estate needs to reflect the fact that we have paid off the £200k, not him. He could pay off his half (just) but it would leave him with nothing in the bank. And secondly, I think he, and we, have done our bit. He and his wife paid taxes and NI for 50 years, we have done it for 30 years and we cared for her at home with no recourse to the public purse for years. In fact had she not passed away quite quickly at the end we had plans to spend £2k a week having carers on site to keep her with us in her final months. His brother had the same opportunities to save and build a safety net and chose to spunk it on beer, cigs and holidays (and cars) and now gets all his care bills paid. The old fella saved, was careful and went without. This Govt. seem to recognise that and if they gave him the opportunity to pay a fixed sum and have any future care bills taken care of he would take it.
I get the moral indignation that I am somehow trying to avoid care home charges but on paper he has 50% in the house and if I pay the mortgage off it looks like he has a 50% share in a house with £200K less on the mortgage. His estate needs to reflect the fact that we have paid off the £200k, not him. He could pay off his half (just) but it would leave him with nothing in the bank. And secondly, I think he, and we, have done our bit. He and his wife paid taxes and NI for 50 years, we have done it for 30 years and we cared for her at home with no recourse to the public purse for years. In fact had she not passed away quite quickly at the end we had plans to spend £2k a week having carers on site to keep her with us in her final months. His brother had the same opportunities to save and build a safety net and chose to spunk it on beer, cigs and holidays (and cars) and now gets all his care bills paid. The old fella saved, was careful and went without. This Govt. seem to recognise that and if they gave him the opportunity to pay a fixed sum and have any future care bills taken care of he would take it.
Cogcog said:
he has 50% in the house and if I pay the mortgage off it looks like he has a 50% share in a house with £200K less on the mortgage. His estate needs to reflect the fact that we have paid off the £200k, not him.
All you need to do is get your solicitor to document the change. For instance, changing the shares of ownership from 50:50 to 75:25 (or whatever). It's very simple, very usual and very legal.otherman said:
You want the rest of us to pay for his care, instead of your own family doing it, by conning the bank, and trying to keep the house money for yourself. You do know that government money comes from taxpayers, right?
One could argue that the Father in Law has already paid for his care, by means of the tax that he's been paying for the last (x) years. He'll (likely) be one of the taxpayers you mention......
Cogcog said:
he has 50% in the house
You'll want to double check this but I believe that there is case law for this showing that 50% of a house is almost worthless for the purpose of care home fees. Special Commissioners V Palfrey indicates that the value of half a house, providing the co-owners don't want to sell, is whatever a buyer in the open market would be prepared to pay for half of a house in the knowledge that the people he will be co owning with don't want to sell. Given that this value will be Nil, or very close to it. Since the value is negligible this value will have little or no impact on the capital assessment of your fathers assets, they cannot put a charge on something which has a negligible value. You may have to fight this point, but it's worth doing so - even if you have to pay for professional advice and support.If your father has cash then this is easier for the LA to value. How this relates to the mortgage debt I don't know but I suspect that the mortgage is in your name not his so it wouldn't form part of the equation so you may be better paying it off and then helping him out with cash. Again you probably want to take professional advice on this.
Muzzer79 said:
otherman said:
You want the rest of us to pay for his care, instead of your own family doing it, by conning the bank, and trying to keep the house money for yourself. You do know that government money comes from taxpayers, right?
One could argue that the Father in Law has already paid for his care, by means of the tax that he's been paying for the last (x) years. He'll (likely) be one of the taxpayers you mention......
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