buying my parents house?

[project 112]

my parents own there own house which has been left to me and my brother in there will when they die. A recent family death after a period in a care home has made it clear that the house would be used to fund care in one of these homes should my mum or dad or both for that matter, need it. is there a way to avoid this? could my dad sell the house to me and my brother for a silly price eg 10,000 if so what would be the legal stance on this, stamp duty , tax etc or could he simply sign over the house to us, it goes without saying of course that they would still live there,any advice would be helpful before we take this any further thanks in advance

[mas99]

Any gift to avoid IHT needs to be made 'without reservation' (so kick them out of the house now) and they need to survive for 7 years after giving it to you.

If you're planing on going down any of these avoidance routes talk to a decent expert first. For me, its making too many decisions just to avoid tax rather than for what you want to do.

You may be able to do something with a trust, but that will cost and has issues as well.

[Deva Link]

IHT isn't the issue in the original question. It's the issue of the properties value being taken into account to pay for care home fees.

Basically, if the local authority feel that the house has been disposed of in order to avoid paying care fees then they can disregard the sale and assess your parents assets as if they still owned the house.

The same advice applies though - it's a legal minefield and the rules keep changing so you need someone who is skilled in this area and is on the ball.

[Taita]

My parents did something similar with my Grandparents.

Kids own the houses, they live there rent free provided that it is 'kept in good condition'.

Had to be done 7 years in advance though. Was a good few years ago though.

[project 112]

thanks for your replys, as deva link said i,am not trying to avoid paying any tax, fees, that might be due i just want to stop the care home (if they ever have to go in one) or the social or the goverment or whoever taking what my mum and dad have worked for all there lives,just to pay for them to be looked after in their old age, when the person in the next bed so to speak, has pi**ed anything they ever had up the wall and still gets the same care.if this sounds a bit selfish then so be it.it just seems unfair that people who have tried to put a few bob away for there children wether its a bit of cash or property always end up paying through the nose for people, perhaps through no fault of there own or for people who just can,t be arsed and expect to be cared for by the people who can!

[Tiggsy]

pretty simple - forget the IHT angle, gift with reservation rules make it very messy anyway - and the OP isnt asking about this.

there are two issues with the care home side of things....1. if your folks are old and may need care in the near(ish) future then it will be simple for the local authority to argue it was done for avoidance of the care costs (deliberate deprivation) and it wont work. 2. if your folks are young and the house will be yours for many years...the idea is sucky - there would be a CGT issue for you when you sell it and (far more important) you could end up loosing their house via divorce, debt, etc....i've never advise an elderly couple yet who have done this after hearing the pros and cons.

of course, the other issue is that care homes are often st and (if it were my folks) i'd be happy for them to use their own assets (their house) to give themselves a nice standard of living in their latter years in a good home. if you get the local authority to pay, dont expect to be able to be picky over the home!

[Jespin]

Speak to a decent solicitor regarding some protective property trusts. The local authority cannot take a charge on the property when the first parent goes into care as there is still someone ese living in it. The concern is over the last to die (only person in the house) going into care. In this case, protective property trust can be used to gift half the value of the property to the children on the first parent to die whilst still allowing the remaining spouse to live in the property rent-free for the remainder of their life. This will get half the value of the property out of the care fees problem. Getting the remainder out proves more difficult.

Another option is to get the property valued with your parents remaining in the property for life as tenants. This will massively reduce the value of the property as it is not much use to anyone else wanting to use the property if they have to wait for the people already in it to both die. You could then purchase the property at this value and your parents could then continue to live in it rent-free. This would not be a gift with reservation as full consideration would have been made on the transfer. I have known this option used to reduce IHT liabilities in the past and would work for care fees too as it is deemed a commercial transaction 'at arms length'. The only problem is being in the financial position to buy the property.

[Tiggsy]

and then the CGT issue thereafter and the fact the parents dont own the house 100% (as is the same with placing half in trust on 1st death)...all for something that might not happen.

bottom line is that many old people have ample resources to look after themselves if their final couple of years are spent in a home.....but the kids want their money and end up doing stuff like this which exposes the parents to issues that would not arrise otherwise.

when i'm 90 my house will be my house and if i need to sell it to get an excellent level of care in a nice home with ensuite overlooking the thames....then i will and my kids can go jump!

[Broomsticklady]

Or do what we're doing with my mother's house - rent it out to cover the costs of care so you have an - eventually - increasing asset when she snuffs it.

[Deva Link]

Broomsticklady said:

Or do what we're doing with my mother's house - rent it out to cover the costs of care so you have an - eventually - increasing asset when she snuffs it.

It must be a heck of a house if the rental income will cover the cost of residential care.

[Tiggsy]

Deva Link said:

Broomsticklady said:

Or do what we're doing with my mother's house - rent it out to cover the costs of care so you have an - eventually - increasing asset when she snuffs it.

It must be a heck of a house if the rental income will cover the cost of residential care.

as above....saw a chap yesterday paying £1000 per week for his care home.

[loltolhurst]

there was a big article on this in sunday times if u look it up

[Broomsticklady]

Deva Link said:

Broomsticklady said:

Or do what we're doing with my mother's house - rent it out to cover the costs of care so you have an - eventually - increasing asset when she snuffs it.

It must be a heck of a house if the rental income will cover the cost of residential care.

No, but by the time the govt pay their bit, about £300 per month, and you take into account my mother's pension etc, it only leaves about £150 a month for us to pay

[project 112]

Broomsticklady said:

Or do what we're doing with my mother's house - rent it out to cover the costs of care so you have an - eventually - increasing asset when she snuffs it.

so have you bought your mothers house then? if not i thought the goverment won,t pay anything towards her care while she still has assets of her own ie her house,if you have bought it, it brings us back to my original question. this sounds like a good idea though!

[2 5HAN]

project 112 said:

Broomsticklady said:

Or do what we're doing with my mother's house - rent it out to cover the costs of care so you have an - eventually - increasing asset when she snuffs it.

so have you bought your mothers house then? if not i thought the goverment won,t pay anything towards her care while she still has assets of her own ie her house,if you have bought it, it brings us back to my original question. this sounds like a good idea though!

Your parents will regardless of their income or assets be entitled to some state assistance.
These are all non means tested benefits:

Attendance Allowance Lower Rate £47.10 or Higher Rate £70.35 Weekly
State Pension IRO £95.00 per week
and if in a Nursing Home the "RNCC" Registered Nursing Care Contribution £106.30 p/w

In essence it means that you can discount these figures from your overall weekly fee.

The best thing you can do is speak to a specialist, there are schemes out there that may help you but you must do it correctly or else as mentioned by other posters, the Social Services will simply see through your attempts and claim that your parents have deliberately disadvantaged themselves.

I think the other most important thing to bear in mind is that do you really want your parents to have to rely on a Social Services funded Care Home? Have a look around some homes and you sadly see the level of variation there is.

[Tiggsy]

2 5HAN said:

I think the other most important thing to bear in mind is that do you really want your parents to have to rely on a Social Services funded Care Home? Have a look around some homes and you sadly see the level of variation there is.

As above....how will you feel when your folks are in a crap home and the nice one they built up over the years is in your back pocket!

[mccrackenj]

Tiggsy said:

and then the CGT issue thereafter and the fact the parents dont own the house 100% (as is the same with placing half in trust on 1st death)...all for something that might not happen.

bottom line is that many old people have ample resources to look after themselves if their final couple of years are spent in a home.....but the kids want their money and end up doing stuff like this which exposes the parents to issues that would not arrise otherwise.

when i'm 90 my house will be my house and if i need to sell it to get an excellent level of care in a nice home with ensuite overlooking the thames....then i will and my kids can go jump!

Have to agree with this wholeheartedly. Of course it's unfair that someone who has saved to buy a home should have to sell it to fund their care when some other ne'er-do-well without assets gets it paid for by the tax-payer - but's its also very bl**dy unfair for someone with an asset worth maybe several £'00k to expect to have their care paid for by the poor long-suffering tax-payer as well - just so that they can pass this asset on to their kids!

The really annoying thing is that the children usually seem to see the property as something that's 'theirs' - forgetting that is doesn't belong to them at all. Their parents paid for it, not them!

[bogwoppit]

How is this any different to other benefits? Have a job? Sorry, you don't get jobseekers' allowance. Have enough money/assets for your own house? Sorry, you don't get a council house. Have enough money/assets for your own care home? Sorry, you don't get a free care home. Similarly, if you want better dental care you can forego NHS treatment and go private.

A long time ago the citizens of this country decided that those of greater means should pay for the basic needs of those of lesser means. Sure you can see it coming and "beat" the system by pissing your assets up the wall, but that's everybody's choice. Nobody is forced to earn a lot, own a house or pay for private dental care, but they do because it's still better than the alternative.

At least with care homes you do get a contribution from government, with housing you don't get anything and pay council tax for the privilege. The problem with this particular system is that residential care is so expensive, people don't realise it and the population is ageing. So whilst people thought they had enough to pass on to their kids, they don't.

[Tiggsy]

bogwoppit said:

How is this any different to other benefits?

exactly. if you are old and need care and have a house that you dont need why should i (tax payer) fund your care? the idea that just because someone "paid into the system" for years should get £50k pa off care at the end of their life is ridiculous.