Funding Care

[Concerned J]

I haven't been here for ages. Mum is now in a home and settled so life plods along for her.
I have POA and when Dad died in 2010 he left Mum in a very good financial position. However the house was in a state and needed a lot of work doing which we have done over recent years.
This means we now have a decent house but not so much cash.
The care home fees went up in April (by 25% !!) .
We (4 siblings) never wanted to sell the house but we have to be realistic.
One of my sisters has decided she will move into the house. My concern is that as POA I know that Mum has enough money to pay at the current rate for probably 18 months . At the end of 18 months we could decide to sell the house but if it takes a year to sell can we rack up a care bill to be paid out of the estate at a later date.
Sorry - I realise that this is a complete ramble. I'm happy to be POA but feel things are getting too complicated .

 

[allchange]

Not quite what you are asking, but your sister must pay a proper rent on the property. Hopefully this is already the plan. Make sure that there is a proper tenancy in place so that it is possible to end the tenancy should the need arise and so that there is no confusion.

 

[Beate]

You can enter into a Deferred Payment Agreement with the council when the money runs out, but that also costs to set up.

I agree, your sister has to pay full market rent. As POA you have to act in your Mum's best interest, and if she needs cash soon, you'll either have to sell the house or get tenants in to cover some of the care costs. Your sister cannot just decide to live there rent-free.

 

[Zen master]

Take a look at Deferred Payment Agreements with your local authority. They are obliged to offer you this option but in my experience the option is often skirted over. In practice this is where social care fund the placement in full and place a legal charge against the property. This will have to be repaid in full at a later date. You do still have an assessed weekly charge but have to be left with at least £144 per week but can choose a lesser amount.
It does involve some hoops and bureaucracy to jump through. You have to look at selling when the costs paid in advance reaches the approximate level of the value of the house less the capital limits. So as an example if House was worth £200k take off about 20%. Dependent on weekly cost of care this may give you 4+ years without the need to sell in which time it can be rented out and also increase in value to offset cost of care.

Technically you are still self funding so can still be eligible for attendance allowance etc. Any rent less 10% does have to be given across in contributing to assessed contributions as well.

It worked well for our circumstances.

Example of ours.
Cost of care £795 per week
Less
Contribution from pension and Attendance Allowance (higher rate)£288
Contribution from Rent £166

Remaining cost covered by social care and added to bill £341 Per week.

Sorry if this is long winded and social care may get twitchy if above Expected to Pay Rates but should not prevent them.

Best wishes

 

[Zen master]

You can enter into a Deferred Payment Agreement with the council when the money runs out, but that also costs to set up.

I agree, your sister has to pay full market rent. As POA you have to act in your Mum's best interest, and if she needs cash soon, you'll either have to sell the house or get tenants in to cover some of the care costs. Your sister cannot just decide to live there rent-free.

Beat me to it as doing such a long winded reply !

 

[Norfolk Cherry]

Take a look at Deferred Payment Agreements with your local authority. They are obliged to offer you this option but in my experience the option is often skirted over. In practice this is where social care fund the placement in full and place a legal charge against the property. This will have to be repaid in full at a later date. You do still have an assessed weekly charge but have to be left with at least £144 per week but can choose a lesser amount.
It does involve some hoops and bureaucracy to jump through. You have to look at selling when the costs paid in advance reaches the approximate level of the value of the house less the capital limits. So as an example if House was worth £200k take off about 20%. Dependent on weekly cost of care this may give you 4+ years without the need to sell in which time it can be rented out and also increase in value to offset cost of care.

Technically you are still self funding so can still be eligible for attendance allowance etc. Any rent less 10% does have to be given across in contributing to assessed contributions as well.

It worked well for our circumstances.

Example of ours.
Cost of care £795 per week
Less
Contribution from pension and Attendance Allowance (higher rate)£288
Contribution from Rent £166

Remaining cost covered by social care and added to bill £341 Per week.

Sorry if this is long winded and social care may get twitchy if above Expected to Pay Rates but should not prevent them.

Best wishes

Can you overpay your contribution if you can raise more rent, to reduce the overall amount you borrow? Thanks.

 

[Zen master]

I don’t see why not. Mine was just an example of how ours worked. With renting there is always the nightmare tenant and voids scenario but hopefully if a family member this is more predictable!
You can reduce down your personal allowance from the minimum £144 to whatever is manageable also.
Once toiletries, haircuts, podiatry, outings etc have been taken into account then make a judgement call on what your family member really needs per week as an allowance. For every pound added makes the need to sell more distant and the total liability that little bit less when the time comes.

 

[Concerned J]

Thank you every one for your replies. As rightly pointed out i'm not entirely sure what I am asking in the first place but your comments have certainly given me something to think about.
Thank you all lovely people

 

[allchange]

Bear in mind, that depending on your mum's income, some of the rent income may be taxable. If she does not own the property outright then you will need the mortgage lenders approval to rent out. Also as a rented property you will have to inform/change your mum's building insurer.

If you do agree to rent to your sister then remember that your mother will lose her empty property council tax exemption (https://www.thanet.gov.uk/your-serv...-exemptions/people-in-hospital-or-care-homes/), so make sure the contract excludes council tax and that your sister knows that she must pay this and all other household bills bar buildings insurance and landlords repairs and maintenance. If your sister is on housing benefit then the council must approve the tenancy as a commercial arrangement otherwise they may not pay housing benefit as it is renting to a close relative.

Only rent to her if she is a solid prospect and can afford it. If she would not be somebody that you would rent to if she wasn't related don't do it. On the other hand if you do wish to rent the property out then a reliable relation can be the best bet.