Mum's home, not to give it to equity release or a care home.

Mum's home, not to give it to equity release or a care home.

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knitware

Original Poster:

996 posts

134 months

Tuesday 7th May
quotequote all
I will need to see Citizens Advice and a legal expert, but I thought I would list options for mum here, and if there are other options please do advise.

The issues she has, and I guess very common with a lot of people.
• Mum is receiving state retirement benefit only and is worried about covering her living expenses. To solve this, I can set up a monthly payment to cover her living expenses, this is the easy part, but:
• She wants to protect her assets. She is worried that should she end up in a care home that her house will be sold to pay for her care. However, the money for her care has come from somewhere so perhaps its reasonable that she should use this asset to cover the cost. She is fit and still works, she’s 78 this year.

She has no personal pension and only one asset, her house, with a value of around £110k, so the options:

1 – I buy her house with a mortgage, it may difficult to secure lending against a relative’s home and what happens if she needs to live in a care home, could me buying the property be seemed as her disposing of equity?

2- She gifts her home to me to protect the asset being used for future costs associated with care home payments. Is this ethical and could it be deemed disposing of equity therefore unachievable?

3- Upload her to live with us, use the house as a rental to generate an income, or sell the house and convert the loft into a living space for her with left over cash as savings.

Any other options? I have suggested she moves to us but she’s a stubborn old trout, cantankerous and doesn’t want to leave the village where she’s lived for many years, which is understandable. Maybe she’ll change her mind given her limited options.

bogie

13,937 posts

213 months

Tuesday 7th May
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3) is what 2 of my friends have done when their parents needed looking after. Sold parents house, buy some BTL with it and use the income for the parent to live off, ultimately the income paid the care home when they needed 24hr care. Children inherit the BTL when parent dies.

Newky Brown

911 posts

169 months

Tuesday 7th May
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2 is doable but it can be as you say, disposal of assets and some councils may take a dim view and force its sale to cover care home fees anyway. That's what we a were advised several years ago when in a similar situation.

We were also advised that to make our case "stronger", if we went ahead I should charge the parent market rent but then that has to be declared and tax paid, etc.

Bit of a minefield and legal advice is recommended.

moles

1,348 posts

185 months

Tuesday 7th May
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What happens if option 3 she needs 24/hr care and has to go into a home. Council will want the money from her house sell won’t they and it might be wrapped up in your property?.

Mr-B

1,971 posts

135 months

Tuesday 7th May
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Whatever happens if local authority care is needed they will go through your mother's financial details with a fine tooth comb and look very carefully at what they deem "self deprivation" of assets, giving them away basically. If they deem self deprivation has taken place she will have to fund herself.
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Evolved

2,080 posts

128 months

Tuesday 7th May
quotequote all
Mr-B said:
Whatever happens if local authority care is needed they will go through your mother's financial details with a fine tooth comb and look very carefully at what they deem "self deprivation" of assets, giving them away basically. If they deem self deprivation has taken place she will have to fund herself.
I think they go back 7 years, if she doesn’t require any care in that time, it shouldn’t be an issue.

Mr-B

1,971 posts

135 months

Tuesday 7th May
quotequote all
Evolved said:
I think they go back 7 years, if she doesn’t require any care in that time, it shouldn’t be an issue.
Ah yes the oft mis-quoted 7 year rule, doesn't exist, they can go back as far as they like. 7 year rule applies to inheritance tax avoidance.

BoRED S2upid

15,071 posts

181 months

Wednesday 8th May
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Move to wales is the obvious answer (to everything) more generous threshold than England or Scotland as to how much you can keep before having to pay care costs.

markcoznottz

4,944 posts

165 months

Wednesday 8th May
quotequote all
Mr-B said:
Whatever happens if local authority care is needed they will go through your mother's financial details with a fine tooth comb and look very carefully at what they deem "self deprivation" of assets, giving them away basically. If they deem self deprivation has taken place she will have to fund herself.
Have you found any evidence of this, I mean where the local authority has ever proved deprivation of assets? We know about IHT, but there's precious little anecdotal stories out there. This is from age Uk;

'Deprivation of assets means you have intentionally decreased your overall assets in order to reduce the amount you are charged towards the cost of care services provided by your local authority. Your local authority must show that you knew you may need care and support in the future when you carried out this action.'

Seems a bit Woolly really. If the disposal of assets was before the individual had any illness at all then surely they are in the clear? But this is usually done for IHT not care costs. How can you prove that someone knew they needed long term care before they actually needed it?

The Leaper

3,286 posts

147 months

Wednesday 8th May
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markcoznotzz,

Maybe you're showing your age...there's plenty among us oldies who have exactly this concern. I/we grew up in a period when care was available and the matter of cost was not a concern so the concept of me/we making provision for my/our future care was not something I/we thought about. Now I'm supposed to be content to have everything I've been encouraged to achieve..savings, own my house etc..under the real threat of legally being taken away from my control.

I do feel that one's future care is something that should be funded in advance either through increased NICs, taxation or private insurance, but to change the regime as has been done leaves us older persons not in a position to do any forward financial planning for the care consequences.

Having been encouraged by all the political parties to bust a gut to buy my own home in the past, it feels like the same parties are now after getting their hands on it by whatever means.

And now we have the Labour Party thinking of, in effect, nationalising all private property "at no cost to the tax payer" so that means my house could be simply stolen from me. Will this mean that my future care will be free? I don't think so.

I'd encourage the OP to seek whatever means he can to keep the property but from what he says it looks like "deprivation" to me whatever is done, with the inevitable result.

R.

markcoznottz

4,944 posts

165 months

Wednesday 8th May
quotequote all
The Leaper said:
markcoznotzz,

Maybe you're showing your age...there's plenty among us oldies who have exactly this concern. I/we grew up in a period when care was available and the matter of cost was not a concern so the concept of me/we making provision for my/our future care was not something I/we thought about. Now I'm supposed to be content to have everything I've been encouraged to achieve..savings, own my house etc..under the real threat of legally being taken away from my control.

I do feel that one's future care is something that should be funded in advance either through increased NICs, taxation or private insurance, but to change the regime as has been done leaves us older persons not in a position to do any forward financial planning for the care consequences.

Having been encouraged by all the political parties to bust a gut to buy my own home in the past, it feels like the same parties are now after getting their hands on it by whatever means.

And now we have the Labour Party thinking of, in effect, nationalising all private property "at no cost to the tax payer" so that means my house could be simply stolen from me. Will this mean that my future care will be free? I don't think so.

I'd encourage the OP to seek whatever means he can to keep the property but from what he says it looks like "deprivation" to me whatever is done, with the inevitable result.

R.
The very worst Marxist ideas would be watered down by the civil service anyway, he would just do what brown did and tax by stealth. Not much wiggle room now though, and a very endebted population. I suspect the issue it remains cloudy is because it's a vote loser to say 'we will take this % for care costs'. It hardly encourages people to pay thier mortgage off if the last chunk you pay is going straight back to the state, not including IHT and probate etc. You may as well just rent and not give a fk like the French/Italians do.

av185

8,090 posts

68 months

Wednesday 8th May
quotequote all
Evolved said:
Mr-B said:
Whatever happens if local authority care is needed they will go through your mother's financial details with a fine tooth comb and look very carefully at what they deem "self deprivation" of assets, giving them away basically. If they deem self deprivation has taken place she will have to fund herself.
I think they go back 7 years, if she doesn’t require any care in that time, it shouldn’t be an issue.
Few local authorities will bother going through her details 'with a fine tooth comb'. They are not, and never have been, forensic accountants lol.

This is largely an internet myth btw.

Mr-B

1,971 posts

135 months

Wednesday 8th May
quotequote all
av185 said:
Few local authorities will bother going through her details 'with a fine tooth comb'. They are not, and never have been, forensic accountants lol.

This is largely an internet myth btw.
Internet myth? Good luck relying on that. (you are wrong BTW)

Tiggsy

9,651 posts

193 months

Thursday 9th May
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For clarity.....if you go into care and a few years earlier turned your significant asset (your house) into a buy to let for income/any other version of "what if".....the local authority don't need to get Hong Kong Fuey on the case when you claim "no wealth".

Actually using the real Hong Kong Fuey may be internet myth (the rest is not)

markcoznottz

4,944 posts

165 months

Thursday 9th May
quotequote all
Tiggsy said:
For clarity.....if you go into care and a few years earlier turned your significant asset (your house) into a buy to let for income/any other version of "what if".....the local authority don't need to get Hong Kong Fuey on the case when you claim "no wealth".

Actually using the real Hong Kong Fuey may be internet myth (the rest is not)
Where's the cut off point though? What if you gifted the house when you were younger and in good health and the 7 year IHT period has passed? You have complied with current legislation re taxation, I don't know how the local authority could prove you did it because you knew you were going to be ill and go into a home?

Nickbrapp

2,688 posts

71 months

Thursday 9th May
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2 is probs the best option, no one seems to know what really qualifies as wilful disposal of assets, you could sign your house over to your kids and have a stroke at 45 and the next day be in care, but how would they ever prove that to be wilful.

If you’re mum is fit and healthy now, then now is the time to sign the house over to you, she may never need a carehome and could well die at home. But you’ll be kicking yourself if she goes in in 10 years time.

The worst that can happen then is you have to sell the house anyway, and I believe there threshold for paying for care is £24k?

Why not equity release? I know you won’t get the money but she can gift it to you, keep the rest for carers should she ever need it. They again would have to prove she was getting rid of it to avoid the fees, which again would be hard if she was giving it to kids for house deposits etc

Just don’t get into the situation my partners Nan is in, equity released 15 years ago, all the cash is gone now and the house (4 bed detached 60s place) needs a lot of work but there’s no money to pay for it. The council is paying for at home carers for her.

troika

639 posts

92 months

Thursday 9th May
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This is the problem with elderly care. Everyone wants it and wants it to be of the best quality, but wants someone else to pay for it.

markcoznottz

4,944 posts

165 months

Thursday 9th May
quotequote all
troika said:
This is the problem with elderly care. Everyone wants it and wants it to be of the best quality, but wants someone else to pay for it.
Just an honest debate would do, under no circumstances should it be means tested.

The Leaper

3,286 posts

147 months

Thursday 9th May
quotequote all
Care is so expensive. I know of a situation where the wife needed full time care at home, which worked out at £6000 pm, and subsequently three visits a day costing £500o pm. She is now in a home costing £4500 pm.

R.

Nickbrapp

2,688 posts

71 months

Thursday 9th May
quotequote all
The Leaper said:
Care is so expensive. I know of a situation where the wife needed full time care at home, which worked out at £6000 pm, and subsequently three visits a day costing £500o pm. She is now in a home costing £4500 pm.

R.
You do have to wonder why it’s so expensive? A carer is quite similar to a nanny, you could have one of those for much less

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