Care costs / finance / House equity
Discussion
Hi Guys,
Just looking for a table of advice ....
My mother is in a respite home, and currently it looks as though she may stay there.
The costs are massive, but we are trying to keep her house as long as possible.
The current plan :
Rent house out
My sister and I will top up the difference, which looks to be bout £1000 /month each.
The easy solution is to sell the house, but by keeping the house we should get rental of about £36K a year, + and increase in house price /year.
The problem ...
We have no idea what the future holds but we want to ensure that we can both recoup the money we have used as 'top up' from the value of the house when 'the time comes'. Effectively we are looking at taking equity out of the house, but providing the money ourselves,
Our main concern ...
If social services get involved in the future (we're not planning on this but as I say, who knows what the future holds), they can insist on the sale of the house to fund care.
How can we ensure the 'top up' money we have provided is guaranteed to be safeguarded for us.
I'm guessing we need a lien on the house ...
Thanks in advance ...
Just looking for a table of advice ....
My mother is in a respite home, and currently it looks as though she may stay there.
The costs are massive, but we are trying to keep her house as long as possible.
The current plan :
Rent house out
My sister and I will top up the difference, which looks to be bout £1000 /month each.
The easy solution is to sell the house, but by keeping the house we should get rental of about £36K a year, + and increase in house price /year.
The problem ...
We have no idea what the future holds but we want to ensure that we can both recoup the money we have used as 'top up' from the value of the house when 'the time comes'. Effectively we are looking at taking equity out of the house, but providing the money ourselves,
Our main concern ...
If social services get involved in the future (we're not planning on this but as I say, who knows what the future holds), they can insist on the sale of the house to fund care.
How can we ensure the 'top up' money we have provided is guaranteed to be safeguarded for us.
I'm guessing we need a lien on the house ...
Thanks in advance ...
I can't specifically answer your question, but in the same circs, I sold the house and bought an annuity. I included inflation in the annuity and got a capped annual increase deal with the care home.
Doesn't cover all eventualities, but had worked well so far.
For your question, perhaps write a loan agreement? That might work ok.
Doesn't cover all eventualities, but had worked well so far.
For your question, perhaps write a loan agreement? That might work ok.
My MiL is in long term care and there is a short fall between her various incomes and the total monthly fee, we do not know the full breakdown of how this is met due a very secretive BiL. However from early in the process we did glean the following, nursing element met by the state, full care allowance claimed on her behave plus state and small civil service pensions used to cover costs. My MiL moved to a care home from hospital, social services dealt with the placement and put this package together.
Firstly sorry about your Mother.
Once social / local Council are aware that she has a valuable asset they will be looking for their costs to be repaid.
This will either involve you selling the house or agreeing to pay her bills ie renting out the house.
I believe it is too late for the house to be put into your names etc.
Another option is to take out an immediate needs annuity which basically is a long term agreement between the Insurance company and her as mentioned by the reply above ( I’m assuming the house could be sold to fund this ) but they are expensive as you might imagine.
However they can be arranged as to fund the vast majority of the care home fees although not all.
If inheritance tax is a concern then obviously once the annuity is purchased this removes money from her potential estate.
I hold LPA for an elderly relative and this is the route I went down ( having sold their house ) as my only aim as Attorney was to ensure that she could remain happy in the care home ( which is really good ) for their rest of her natural life.
Once social / local Council are aware that she has a valuable asset they will be looking for their costs to be repaid.
This will either involve you selling the house or agreeing to pay her bills ie renting out the house.
I believe it is too late for the house to be put into your names etc.
Another option is to take out an immediate needs annuity which basically is a long term agreement between the Insurance company and her as mentioned by the reply above ( I’m assuming the house could be sold to fund this ) but they are expensive as you might imagine.
However they can be arranged as to fund the vast majority of the care home fees although not all.
If inheritance tax is a concern then obviously once the annuity is purchased this removes money from her potential estate.
I hold LPA for an elderly relative and this is the route I went down ( having sold their house ) as my only aim as Attorney was to ensure that she could remain happy in the care home ( which is really good ) for their rest of her natural life.
We did this with my FiL’s house.
Fortunately he had enough private pensions that the rent of his house covered the care home fees.
What you need to understand is Social Services aren’t concerned about where the money is coming from as long as the fees get paid.
If you can do this by renting out and topping up then they should be fine with that.
18 years or so before my mother died she signed her house over to my brother & I, "To ensure the council didn't take it to pay care home fees".
After 18 months in a care home her savings were down to the level at which she could apply for the council to take over paying the fees. They accepted that she did not own a house so took over prime responsibilty for the fees.
One month later she died. So the council had paid £1,600 towards her fees & so had saved me that amount of money (my brother had no money to pay fees).
The house was sold & I had to pay over £10k capital gains tax on the increase in value of my half share since it had been gifted to me.
I would have preferred to have paid the £1600 in fees & just inherited my half share of the house (no tax then due).
My mum wanted to ensure we inherited the house, but actualy made the situation worse for me. The house was my brother's only residence so no CGT due from him.
After 18 months in a care home her savings were down to the level at which she could apply for the council to take over paying the fees. They accepted that she did not own a house so took over prime responsibilty for the fees.
One month later she died. So the council had paid £1,600 towards her fees & so had saved me that amount of money (my brother had no money to pay fees).
The house was sold & I had to pay over £10k capital gains tax on the increase in value of my half share since it had been gifted to me.
I would have preferred to have paid the £1600 in fees & just inherited my half share of the house (no tax then due).
My mum wanted to ensure we inherited the house, but actualy made the situation worse for me. The house was my brother's only residence so no CGT due from him.
I funded my mother for the last 5 years of the life and bought her s flat.
We had loan agreement.
When she dies this was sent to HMRC with the iht400 and s covering note explaining the very significant loans and how the arose.
My position was I did not want to pay iht in money I had lent her. The claim on the estate was accepted without question.
I cannot see why this would not work with social services. You and your sister are finding her living costs and rightly will claim it back when she passes away.
We had loan agreement.
When she dies this was sent to HMRC with the iht400 and s covering note explaining the very significant loans and how the arose.
My position was I did not want to pay iht in money I had lent her. The claim on the estate was accepted without question.
I cannot see why this would not work with social services. You and your sister are finding her living costs and rightly will claim it back when she passes away.
Glosphil said:
18 years or so before my mother died she signed her house over to my brother & I, "To ensure the council didn't take it to pay care home fees".
After 18 months in a care home her savings were down to the level at which she could apply for the council to take over paying the fees. They accepted that she did not own a house so took over prime responsibilty for the fees.
One month later she died. So the council had paid £1,600 towards her fees & so had saved me that amount of money (my brother had no money to pay fees).
The house was sold & I had to pay over £10k capital gains tax on the increase in value of my half share since it had been gifted to me.
I would have preferred to have paid the £1600 in fees & just inherited my half share of the house (no tax then due).
My mum wanted to ensure we inherited the house, but actualy made the situation worse for me. The house was my brother's only residence so no CGT due from him.
Seems a bit rich moaning about a £10k tax bill when you’d all have been quite happy fleecing the tax payer out of thousands had things been different. After 18 months in a care home her savings were down to the level at which she could apply for the council to take over paying the fees. They accepted that she did not own a house so took over prime responsibilty for the fees.
One month later she died. So the council had paid £1,600 towards her fees & so had saved me that amount of money (my brother had no money to pay fees).
The house was sold & I had to pay over £10k capital gains tax on the increase in value of my half share since it had been gifted to me.
I would have preferred to have paid the £1600 in fees & just inherited my half share of the house (no tax then due).
My mum wanted to ensure we inherited the house, but actualy made the situation worse for me. The house was my brother's only residence so no CGT due from him.
2 GKC said:
Seems a bit rich moaning about a £10k tax bill when you’d all have been quite happy fleecing the tax payer out of thousands had things been different.
Possibly not the place for this debate, but fleecing the tax payer?!? Really?How about it’s the tax payer that’s being fleeced - as usual the feckless or those that pissed away their lives don’t have to pay a bean for this care. And isn’t it paid by the state in Scotland?
This is something I am more than happy to see people use any available dodges to avoid.
Incidentally- the poster who’s mother died sadly after a month - if your mother had lived longer than seven or so months then you would actually have been quids in by an ever increasing amount.
Reading with interest as we also have this situation looming. Isn't there a scheme where the local authority pay the fees then you repay them from the estate after death when the house is sold, or did I dream that? Also looking at equity release, do you get a lump sum, then sort out the monthly care home fees from that, then in another couple of years possible need another equity release? Or can you do it once and take a monthly amount from the equity?
As regards Equity release afaik once the transaction takes place all the money is released for the individual to do with as they wish -obviously if you are acting for said individual then you need already to have a Financial ( and quite possibly Heath and Welfare ) LPA already in place.
I have always been a bit skeptical about these schemes albeit with nothing more technical than gut feel in mind though.
Going back to the INA schemes, various companies will provide quotes and the prices seem to vary a fair bit.As Bert has already mentioned I also did mine through a Financial intermediary albeit one with whom I already used as until I mentioned it I had precisely no knowledge of INA's.
The application /quote process was quite lengthy and naturally involves medical questionnaires so was happy to pay someone to do this on my /my relatives's behalf.
I have always been a bit skeptical about these schemes albeit with nothing more technical than gut feel in mind though.
Going back to the INA schemes, various companies will provide quotes and the prices seem to vary a fair bit.As Bert has already mentioned I also did mine through a Financial intermediary albeit one with whom I already used as until I mentioned it I had precisely no knowledge of INA's.
The application /quote process was quite lengthy and naturally involves medical questionnaires so was happy to pay someone to do this on my /my relatives's behalf.
My mother has just got past the break-even point with her annuity. If we'd not got it, then her money would be down to the means test level now with the LA taking over. However, it didn't feel that simple. All the homes we looked at that took the LA fee rate were uniformly horrible places. Run down and smelly.
The place we chose (Anchor) was freshly built/refurbed and didn't and doesn't smell - it's £4k per month. The care is ok/good by and large although we have had some low points.
If we'd relied on the LA to pick up, the risk is that they'd not pay what the care home costs and my mum would have to move to one of the aforementioned s
tholes.
One thing that didn't seem an option was that the LA paid their rate and family topped up to the Anchor rate.
I have consulted a company called Grace Consulting a few times when we have needed to look at the options and get an independent view of how to navigate the options - esp when we were dealing with the LA. It's not a cheap service, but the information and discussion from them has been very good indeed.
The place we chose (Anchor) was freshly built/refurbed and didn't and doesn't smell - it's £4k per month. The care is ok/good by and large although we have had some low points.
If we'd relied on the LA to pick up, the risk is that they'd not pay what the care home costs and my mum would have to move to one of the aforementioned s
tholes.One thing that didn't seem an option was that the LA paid their rate and family topped up to the Anchor rate.
I have consulted a company called Grace Consulting a few times when we have needed to look at the options and get an independent view of how to navigate the options - esp when we were dealing with the LA. It's not a cheap service, but the information and discussion from them has been very good indeed.
BertBert said:
My mother has just got past the break-even point with her annuity. If we'd not got it, then her money would be down to the means test level now with the LA taking over. However, it didn't feel that simple. All the homes we looked at that took the LA fee rate were uniformly horrible places. Run down and smelly.
The place we chose (Anchor) was freshly built/refurbed and didn't and doesn't smell - it's £4k per month. The care is ok/good by and large although we have had some low points.
If we'd relied on the LA to pick up, the risk is that they'd not pay what the care home costs and my mum would have to move to one of the aforementioned stholes.
One thing that didn't seem an option was that the LA paid their rate and family topped up to the Anchor rate.
I have consulted a company called Grace Consulting a few times when we have needed to look at the options and get an independent view of how to navigate the options - esp when we were dealing with the LA. It's not a cheap service, but the information and discussion from them has been very good indeed.
My mother was in an Anchor home and they certainly had LA funded residents and I also had a discussion with the home manager about using the LA deferment scheme where the LA pays with the cost secured against the resident's property.The place we chose (Anchor) was freshly built/refurbed and didn't and doesn't smell - it's £4k per month. The care is ok/good by and large although we have had some low points.
If we'd relied on the LA to pick up, the risk is that they'd not pay what the care home costs and my mum would have to move to one of the aforementioned s
tholes.One thing that didn't seem an option was that the LA paid their rate and family topped up to the Anchor rate.
I have consulted a company called Grace Consulting a few times when we have needed to look at the options and get an independent view of how to navigate the options - esp when we were dealing with the LA. It's not a cheap service, but the information and discussion from them has been very good indeed.
The Anchor manager mentioned that a 'hidden' bonus of the deferment scheme was the LA pays the lower LA rate (although obviously would not say what that rate was) and thus the value in the resident's property would last longer.
As it was we decided to sell my mother's flat and then she died six months later after being in the home for a couple of years.
Glosphil said:
18 years or so before my mother died she signed her house over to my brother & I, "To ensure the council didn't take it to pay care home fees".
After 18 months in a care home her savings were down to the level at which she could apply for the council to take over paying the fees. They accepted that she did not own a house so took over prime responsibilty for the fees.
One month later she died. So the council had paid £1,600 towards her fees & so had saved me that amount of money (my brother had no money to pay fees).
The house was sold & I had to pay over £10k capital gains tax on the increase in value of my half share since it had been gifted to me.
I would have preferred to have paid the £1600 in fees & just inherited my half share of the house (no tax then due).
My mum wanted to ensure we inherited the house, but actualy made the situation worse for me. The house was my brother's only residence so no CGT due from him.
Has your brother been paying rent to you? If so, that should cover the £10k.After 18 months in a care home her savings were down to the level at which she could apply for the council to take over paying the fees. They accepted that she did not own a house so took over prime responsibilty for the fees.
One month later she died. So the council had paid £1,600 towards her fees & so had saved me that amount of money (my brother had no money to pay fees).
The house was sold & I had to pay over £10k capital gains tax on the increase in value of my half share since it had been gifted to me.
I would have preferred to have paid the £1600 in fees & just inherited my half share of the house (no tax then due).
My mum wanted to ensure we inherited the house, but actualy made the situation worse for me. The house was my brother's only residence so no CGT due from him.
PF62 said:
My mother was in an Anchor home and they certainly had LA funded residents and I also had a discussion with the home manager about using the LA deferment scheme where the LA pays with the cost secured against the resident's property.
The Anchor manager mentioned that a 'hidden' bonus of the deferment scheme was the LA pays the lower LA rate (although obviously would not say what that rate was) and thus the value in the resident's property would last longer.
As it was we decided to sell my mother's flat and then she died six months later after being in the home for a couple of years.
Interesting. When I was sorting this out a couple of years ago, both the LA and the home were clear that the LA rate was not possible and couldn't say what might happen in the future. Anyway all sorted now with the annuity paying and she's still going (just!)The Anchor manager mentioned that a 'hidden' bonus of the deferment scheme was the LA pays the lower LA rate (although obviously would not say what that rate was) and thus the value in the resident's property would last longer.
As it was we decided to sell my mother's flat and then she died six months later after being in the home for a couple of years.
BertBert said:
PF62 said:
My mother was in an Anchor home and they certainly had LA funded residents and I also had a discussion with the home manager about using the LA deferment scheme where the LA pays with the cost secured against the resident's property.
The Anchor manager mentioned that a 'hidden' bonus of the deferment scheme was the LA pays the lower LA rate (although obviously would not say what that rate was) and thus the value in the resident's property would last longer.
As it was we decided to sell my mother's flat and then she died six months later after being in the home for a couple of years.
Interesting. When I was sorting this out a couple of years ago, both the LA and the home were clear that the LA rate was not possible and couldn't say what might happen in the future. Anyway all sorted now with the annuity paying and she's still going (just!)The Anchor manager mentioned that a 'hidden' bonus of the deferment scheme was the LA pays the lower LA rate (although obviously would not say what that rate was) and thus the value in the resident's property would last longer.
As it was we decided to sell my mother's flat and then she died six months later after being in the home for a couple of years.
However as I saw it the key question was - does the home have LA residents. I wasn’t interested in what the LA paid in comparison to the self funding, just whether there were LA residents there or not.
As I saw it, if the answer was no, then there was the possibility if they lived long enough and their funds run out they might have to move elsewhere when LA took over the funding.
However of the answer was yes (which it was), then if the LA did need to take over funding it would be a more straightforward argument that they remain where they were settled.
PF62 said:
However as I saw it the key question was - does the home have LA residents. I wasn’t interested in what the LA paid in comparison to the self funding, just whether there were LA residents there or not.
Ah, the answer for us was no. One of the two homes was full, the other had one place at that time which we took.We may be a bit off topic now!
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