Can my sister sell her house to her son?

[mumbasi]

My sister age 60, who has fronto temporal lobe dementia, wants to give her house to her son who lives with her. I know she probably can't do that, but can she sell it to him with the proviso that she lives there for the rest of her life like the Equity release schemes do? Her son and myself are both attorneys for her?

 

[canary]

Does she still have capacity to make this decision? If so, then I think it should be theoretically possible. The only reservation I have is that people with FTD tend to make very poor financial decisions and "blow" all their money. My OH has FTD and regularly wants to give away thousands of pounds (he still has capacity) I think that she would need an investment scheme where she cannot access the money without someone else agreeing.
I would recommend that you get a solicitors advice and make sure that everything is legally tied up - do not go for a "family understanding"

 

[jaymor]

I can see no problem as long as it is sold at the going market price and as said by canary, her money is safeguarded.

 

[Beetroot]

You may have trouble with "lives there for the rest of her life" given her condition - what happens when she needs 24 hour care and her son, understandably, cannot cope with that? You have an undertaking that she stays there for life, yet she won't have the mental capacity to argue about it and the person who represents her i.e. her attorney will be arguing with himself. As Canary says, you must have legal advice, but wonder if a a solicitor might have difficulty in advising both both mother and son together. Each will need to take his or her own individual advice and again, there is a have a potential conflict of interest with the son acting for himself and for his mother in this. Unless she has capacity to understand advice, or you as the other attorney can help her with that part.
If the son has to take out a mortgage to buy the property from his mother, the mortgagor will want to know who else lives in the house and what their rights are - might well cause a lot of difficulty if you say Mum has the right to live there for life.

 

[mumbasi]

Thanks for the speedy replies. Well at least it doesn't seem as outlandish as I thought it might seem. So I think now I need to see a solicitor and I won't feel as ignorant as I did before posting.
Thanks again, you are such a support.

 

[arielsmelody]

I would turn the question around and look at it the other way - as the people holding the LPAs, you have to act in your sister's best interests, and is it in her best interests to sell the house while she is still living in it?

At the moment, she has the absolute right to live there, but that is less certain if she sells it. She would have cash in the bank, which would be fine, but if she goes to the LA to ask for carers etc to be provided they won't help until her savings drop below the threshold. If she currently has low savings and her money is tied up in the house she lives in, then care provided in her own home by the LA will be subsidised by the LA.

None of this might be relevant in her case, but I think the crucial thing is to look at it from a very detached point of view to decide what is in her best interests.

 

[mumbasi]

I would turn the question around and look at it the other way - as the people holding the LPAs, you have to act in your sister's best interests, and is it in her best interests to sell the house while she is still living in it?

At the moment, she has the absolute right to live there, but that is less certain if she sells it. She would have cash in the bank, which would be fine, but if she goes to the LA to ask for carers etc to be provided they won't help until her savings drop below the threshold. If she currently has low savings and her money is tied up in the house she lives in, then care provided in her own home by the LA will be subsidised by the LA.

None of this might be relevant in her case, but I think the crucial thing is to look at it from a very detached point of view to decide what is in her best interests.

Good point. That would make a good case for gifting it to her son, who after all is living there and caring for her. Lots to consider.

 

[canary]

I would turn the question around and look at it the other way - as the people holding the LPAs, you have to act in your sister's best interests, and is it in her best interests to sell the house while she is still living in it?

At the moment, she has the absolute right to live there, but that is less certain if she sells it. She would have cash in the bank, which would be fine, but if she goes to the LA to ask for carers etc to be provided they won't help until her savings drop below the threshold. If she currently has low savings and her money is tied up in the house she lives in, then care provided in her own home by the LA will be subsidised by the LA.

None of this might be relevant in her case, but I think the crucial thing is to look at it from a very detached point of view to decide what is in her best interests.

Its a bit of a gamble. You could argue that if she sells the house then she would no longer be liable for insurance, repairs, bills etc.

Good point. That would make a good case for gifting it to her son, who after all is living there and caring for her. Lots to consider.

No, you cant gift it - it would be considered deprivation of assets.


I am assuming that this idea has been considered so that the son has somewhere to live when his mum requires a CH. He could leave it until his mum needs to go into a CH - but the house may have increased in value so that he could not afford it.

There are lots of pitfalls, but I wouldnt discount it out of hand. You might be able to rephrase the terms of her staying there to "until she dies or moves into residential care". Take legal advice about this - a solicitor will be aware of the implications. Find out early on whether there would be problems with any mortgage. Think about it carefully

 

[Sue J]

Good point. That would make a good case for gifting it to her son, who after all is living there and caring for her. Lots to consider.

If it were gifted and not sold that would be in your sister's best interests but could then leave her son vulnerable if he was no longer able to continue caring for any reason or wanted to move out - or needed to claim benefits himself in the future. Maybe, could she gift it in trust to him for a time in the future? It is also in her best interests to know that her son is provided for too.

Seems like a minefield

 

[jaymor]

Gifting your home when you have dementia when the likelyhood of needing care within the home or even in a Care/nursing home is possible is a dangerous thing to do. It is depriving yourself of perhaps your greatest asset which in turn will most likely see the LA refusing to fund any care. They will assess the home as still being there and until the estimated value minus the £23,000 you are allowed to keep they will be looking for someone to pay for the care because they won't.

The person who has gifted the house won't have the funds, the person who received the gift will probably be the one who has to find the charges or fees. Will your brother have available funds to pay?

Something not the same but showing what the LA will do, a member used some of her husband's money to pay utility bills and the LA estimated a much higher figure than she actually used and they reduced the assets he was allowed to keep. If they chase for utility bills they will certainly chase the giving away of assets. Be very careful.

 

[Chemmy]

Be aware too, of POAT - a preowned asset tax. My neighbours put their house into a trust and got stung big time retrospectively by this.

http://www.taxguide.co.uk/content/about-poat-pre-owned-assets-tax

POAT is an extra charge to income tax that aims to tax the yearly benefit you are deemed to get from your continued use of the gift. You can be liable for POAT even if you have no income with which to pay it.