Advice needed - Buying parents house

[Darnay]

So, advice needed please.

I am currently an OPG Deputy for my mother who has dementia and has lost mental capacity. Following a local authority assessment she is about to enter full-time residential care. As Mum will be self funding, she has a 50% interest in a property she currently owns (but neither live in) as tenants in common with my father, therefore the property will have to be sold to release funds for the care.

I am hoping to purchase the property myself, as I actually currently live in it. My father has agreed to an undervalue sale, as such he will gift his share of the property to me and I am proposing to get a mortgage to purchase mums half at the appropriate market price ie. the house values at £180,000 and I intend to purchase my mums share for £90. This will then go towards her care.

My questions are threefold

1. Would the OPG have any objections to this? My brother, who is also a deputy will act on behalf of my mother, and he is agreeable to the purchase.

2. Do we need to obtain any further permission to undertake the transaction on my mums behalf? My brother and I are OPG Deputies - which includes the power to buy and sell property for my mother.

I would appreciate any general thoughts or advice on this matter

 

[karaokePete]

This is an extract from the COP website:-

When you're appointed
You’ll be sent a ‘court order’ telling you what you can and cannot do as a deputy. You can start acting on behalf of the person:

• as soon as you’re appointed - if you’re a personal welfare deputy
• when you pay a security bond - if you’re a property and affairs deputy

You’ll need a separate court order before you can:

• sell a property that’s jointly owned if you’re a property and affairs deputy
• make a one-off decision on anything else that’s not covered by the court order

Check the court order. If there are any mistakes, download and fill in form COP9 with the details and send it to the court within 21 days of receiving the court order. There is no fee.

https://www.gov.uk/become-deputy/when-youre-appointed

 

[canary]

I was a deputy for mum and I had to sell her bungalow to raise funds for her care home. As a deputy you have to submit an anual financial review and you have to show that all major transactions are in her financial interest. I can understand why you want to buy it yourself and why you want to buy it at a reduced rate, but basically, you cant as its not in your mums financial interest to do so. I sold mums bugalow to a friend and I checked up with the OPG to see if there were any problems with this and I was told it was fine so long as the friend bought it at its market value. I got 3 written valuations from estate agents and sold it for the average amount.

I seem to remember that there are further complications as you are in essence using your mums POA to sell to yourself, or if your brother does it, selling to your family which is not allowed. I think there is a way round this by usind an advocate of some sort, but I would contact the Office of Public Guardians about this if you go down this route.

 

[Sam Luvit]

The way you have phrased this is slightly ambiguous

“I am hoping to purchase the property myself, as I actually currently live in it. My father has agreed to an undervalue sale, as such he will gift his share of the property to me and I am proposing to get a mortgage to purchase mums half at the appropriate market price ie. the house values at £180,000 and I intend to purchase my mums share for £90. This will then go towards her care.”

Do you mean you will purchase 50% of the property at a fair market price, or 50% of the property at a reduced market price?

You need to be clearer when explaining the price you will use as the value of the house, as it makes a big difference. Reduced price wouId not be in your mums best interest so wouId be rejected. How the other 50% is valued shouldn’t be relevant as it’s not your mums asset. I hope that makes sense

I read it as you valuing your mums share at fair market value, @canary seems to have read it as your mums share at a reduced price.

 

[canary]

I read it as you valuing your mums share at fair market value, @canary seems to have read it as your mums share at a reduced price.

Yes, that exactly how i read it - sorry if that not true.
You could always just buy your mums share (at the market value) so that the house is still owned by you and your dad as this might make things more transparent. This would, of course, not stop you buying your dads share later on if you wish.

I think you would still need to have an advocate (I think that is what they are called) on behalf of your mum, though.
I have always found the OPG very helpful when I had to ask them for advice.

 

[Susan11]

Yes, that exactly how i read it - sorry if that not true.
You could always just buy your mums share (at the market value) so that the house is still owned by you and your dad as this might make things more transparent. This would, of course, not stop you buying your dads share later on if you wish.

I think you would still need to have an advocate (I think that is what they are called) on behalf of your mum, though.
I have always found the OPG very helpful when I had to ask them for advice.

I think that if your Father needed to pay for care at anytime in the future his gift of his half of the house to you would be considered to be deliberate Deprivation of assets even if 7 years has passed . I would get advice over this as he could be treated as if he still owned the property and have to pay any care fees

 

[Beate]

Deprivation of assets has nothing to do with any 7 years rule. That's to do with tax but deprivation of assets will always be deprivation of assets. Simply put, you cannot buy your Mum's property, whether in its entirety or a share, for anything other than market value.

 

[try again]

Lol. I think as seen on here you need to seek advice
I see nothing wrong with you buying your mother out, as long as it's the fair amount.
As far as your dad gifting his half, I thought if gifts were given and at the time of the gift, there was no expectation that a care home would be needed, it was not deprivation of assets.
Else realistically, how far can they go back? 40 years to that house deposit they paid?

 

[Bod]

My understanding is, the house is owned by Mum and dad (50-50) neither live in the house.
Darney lives in the house.
Mother need to fund her care.
Darney is willing to buy her 50% Father is prepared to give his 50% to Darney.

Questions.
1.Where does father live now?
2. How likely is father to need funds to cover his care?
3.You will be getting the house valued by 3 different Estate Agents to set a market value?
4. You do have a realistic chance of getting a mortgage in your name?
5.The rest of the family are happy with this proposal?

Once you have answered 2,3,&4 speak to the OPG.
If this looks as if its going ahead, talk to a personal tax expert, there could be implications.
Keep all records they will be needed to show exactly what happened, it would be worth talking to the Local Authorities regarding what they regard as Deprivation of Assets.
Good luck

Bod

 

[canary]

As far as your dad gifting his half, I thought if gifts were given and at the time of the gift, there was no expectation that a care home would be needed, it was not deprivation of assets.
Else realistically, how far can they go back? 40 years to that house deposit they paid?

One of out current members @Bunpoots is having problems with the local Authority because her mum gifted her one half of the house that her father lived in before he moved to a care home and the LA think this is Deprivation of Assets. So the answer is - they are willing to go back a long time.

 

[nita]

I don't see a problem if Darnay gives her mother the 50% proceeds of her purchase of the house as that can be used to fund her care. You would still need to apply to the COP though and you might have to attend a hearing. You would probably need to hire a solicitor and a barrister, if it goes to a hearing. It could all work out quite expensive.

If you look at the court order which you obtained as joint deputies with your brother, you will see if there is a clause in there which requires you to get the court's agreement to the sale of any property.

 

[Darnay]

Hey all

Thanks for the replies..

Dad is currently living in sheltered accommodation. If he needs care in future we have agree as a family we will provide that within the family - to avoid deprivation of assets etc

I would hope to buy mums 50% share of the house at market value, based on 3 valuations. Say £90,000

Dad will essentially gift me his 50% share so my mortgage would only be for £90,000. To cover mums means tested care

Hope that clarifies

Can OPG deputies by property from the person they are deputising for?

 

[Susan11]

Hey all

Thanks for the replies..

Dad is currently living in sheltered accommodation. If he needs care in future we have agree as a family we will provide that within the family - to avoid deprivation of assets etc

I would hope to buy mums 50% share of the house at market value, based on 3 valuations. Say £90,000

Dad will essentially gift me his 50% share so my mortgage would only be for £90,000. To cover mums means tested care

Hope that clarifies

Can OPG deputies by property from the person they are deputising for?[/QUOTE

Hi Darnay I think as I and other people have said ..the problem is with your father giving you his share. I would check this carefully before you proceed. Hope it work out for you and you are able to find a solution .

 

[canary]

Can OPG deputies by property from the person they are deputising for?

They can, but its not so straightforward. I cant remember how it is done.

 

[Jessbow]

What/who funds dads place of residence? dad himself?

 

[nita]

There is some guidance on the government website:-

https://assets.publishing.service.g...s/attachment_data/file/714360/cop-gn2-eng.pdf

The guidance contains this paragraph:-

Please note that if trustees intend to sell any land or property (in which the incapacitated person has an interest) to a friend or relative this must be disclosed to the court within the application and suitable valuations supplied from reputable local valuers.

See also:-
https://www.gov.uk/joint-property-ownership/selling-when-an-owner-has-lost-mental-capacity

I would ring the OPG and make an enquiry about your specific situation. They are usually helpful.

 

[Bunpoots]

Hi. As @canary mentioned I had a worrying time with the local authorities financial assessment as my mum gifted me her half of the property he lived in 10 years ago. This property was bought with dad and I as tenants in common so mum never owned it. We knew by this time that dad would outlive her and she had enough funds to cover her carehome placement for a long time.

I’m still not sure what the local authority have decided the situation is, they are being very cagey, but in my case it’s academic as I doubt very much that dad will last long enough to outlive his savings.

I would hope that, especially as you live in the property, the LA would be sympathetic but they have to get their money from somewhere in these cash strapped times.

If your dad needs care in the future then it might cause problems.

 

[Saffie]

Hey all

Thanks for the replies..

Dad is currently living in sheltered accommodation. If he needs care in future we have agree as a family we will provide that within the family - to avoid deprivation of assets etc

I would hope to buy mums 50% share of the house at market value, based on 3 valuations. Say £90,000

Dad will essentially gift me his 50% share so my mortgage would only be for £90,000. To cover mums means tested care

Hope that clarifies

Can OPG deputies by property from the person they are deputising for?

 

[Saffie]

Sorry, that went before it should have done and I can’t seem able to edit it.

The answer is that a Deputy has to appoint a Trustee to act on behalf of the person for whom you are a Deputy. This is quite a complicated affair involving other forms and witnesses for the Trustee etc. It also involves a further payment to the CoP. However, it should be quite possible for to arrange this yourself and I found the lady at th other end of the CoP telephone very helpful. However, in my case the property was owned by my husband and myself rather than a third party being involved which seems a bit more involved.

 

[jugglingmum]

Hi
There is also the potential Capital Gains Tax your parents would have to pay. Basically CGT is due on actual or market value on disposal less value on acquisition. Various factors and allowances to be taken into account. Look on gov.uk and then get advice.

It is highly likely that there will be minimal tax, due to principal private residence relief (PPR) for the years they lived in it, and cgt annual exemption, but as they don't live in the property they will need to do a self assessment tax return, and comply with the deadlines for notification and filing, so could be no tax, but penalties if they don't notify and file on time.

Your father's gift to yourself will be a deemed disposal at market value, so this is the same as your mum's in terms of a tax calculation and return.

I agree that deprivation of assets is likely to be an issue, making gifts at a point at which you can predict the need for care would be considered deprivation of assets, so I would anticipate that an LA would argue anyone over say 70 would be likely to need care in the future - and they can go back as far as they like, but certainly do occasionally go back 20 years. This is an area that LAs will increasingly attack.