Is this allowed?

[sussexsue]

I have to join the school of thought that my parents paid an insurance for care throughout their 50 years of working life. It was called Income Tax and National Insurance. As others have said, in the last few years the rules have changed. My parents were not well off, but dad in particular worked every hour under the sun to provide a good home for his family. Mum took time off to have us kids, but once we were 11 she went back to work and carried on until retirement age. They were careful with their money so by the time they retired they owned their home and had enough money to enjoy their retirement.

My dad died 20 years ago, 4 years after retiring, so no state care needed for him. I am caring for my mum, with no assistance. She even self-funds day care at £50 a day. We have used some of the money from the sale of her house to improve her life-style (ours has gone seriously downhill). She has gifted each of her 4 grown up grandchildren a significant sum towards homebuying, etc, which gave her tremendous pleasure. Whenever she visits their homes they always say "oh you bought this for us nan" - her face really lights up. This was something my parents had always planned to do. Its what families do for each other.

She still has a reasonable pension and savings to fund a significant stay in residential care if it is needed, but there is no way I am bending over backwards to make their hard earned savings readily available for care, which I feel she has already more than paid for over her working life.

I do agree that times have changed and a compulsory insurance scheme should be introduced for everyone of working age (that includes me, even though we retired at 55). However for people of my mum's age I firmly believe free care should be made available to all. Actually its not free - they have paid for it.

 

[NewKid]

Another option......

This is an interesting discussion - if complicated (for this time of night . My own parents' wills (identical in most detail) state(d) that on the death of one, the property and capital assets would be split 50:50 between the survivor and me (and in due course my children) - on the absolute proviso that the remaining parent's care needs were prioritised at all times for as long as needed. This was intended to ring-fence some of their assets against possible care home costs - fair enough I feel? (The Trust idea that Margaret refers to?)

With Mum unfortunately in care I am planning to raise money for it through renting out 'our' property... (I am actually selling the family home and buying a more manageable rentable property, with Mum and me joint 'tenants in common'... ) Would this work for anyone else? (Or is anyone a legal genius and knows there is a flaw in this plan?) I am pretty damn sure my Mum and Dad would support this decision and that it's in the spirit of their will, Mum's care needs will not be compromised but in the longer term the asset will still be there to benefit my family.

I know the maths wouldn't work for everyone/ that some of your parents were not home owners. My parents worked in the public sector when pensions could be relied on - they have decent occupational pensions.. it all helps now with care costs. However.. they were taxed in working life/ these pensions (also the rental income) are taxed.. and I'm of the school that doesn't mind paying a reasonable bit extra to make sure Mum's well looked after... but also feel that it is a right not a priviledge to have a safe and comfortable old age.

 

[Clive]

Hi NewKid

I am not a lawyer and have never done what you intend to do which is sell a house which is half owned by mum and half owned by you AND THEN arrange for MUM'S money to be used to buy another property with YOU.

The legal point I would wish to check and double check is what is the status of your mum’s money at the moment between selling one house and buying the next. At that moment in time you have given up the safety lock of you owning DAD'S half of the house.

As I say I am not a lawyer but if I were the Local Authority I think I would home in on the purchase of a new property as a potential reason for being able to dip into mum’s savings in the future if that becomes necessary. Do make sure you have legal advice.

Clive

 

[Bristolbelle]

Newkid...

Like Clive I don't have the legal training to advise here, but I to feel there is some risk involved between the selling of one property and purchase of another. When we sold our house in order to buy Mum's we were told there was a risk because if she died inbetween the sale of one and purchase of the other we would have had no right to buy this house (ex council in her name) - think I've explained that right. In the end it was all co-ordinated so the sale and pourchase happened within minutes of each other in theory but we were told to be very careful and about the small but very real risk in our plan. The other idea we had had was to get a bridging loan, but that was abortive because again had anything happened to Mum we would have been solely liable for any repayments, and as such no one would lend us enough to make the jump as we were on benefits.
I think I see another problem as they would see no reason for you to buy a property in your joint names if she is already in care, this would mean the income form her share of the "second home"(new house) would be seens as assessable. Apart from reducing your costs if you can not afford the "family home" I can't see any benefit for you in this plan unless I have read it completely wrongly. Sorry to sound so glum, go over it again to be on the safe side. Good luck.

I don't know if I see another flaw as well but you say in the Will that assets were to be split excepting the need for care of either partner in whcih case this toom priority. Would this mean even if the care absorbed more than the 50% share? If so I would think the LA may look upon the whole sum of assets left as being assessable, as opposed to 50%. Have you had this checked?

 

[Splat88]

As I said, I would advise anyone thinking of doing this sort of thing to take some independent legal advice, I'm sure the AZ helpline could point you in the right direction. There is a big difference between worrying about care costs and inheritance tax problems, too. Didn't someone famous once say that there are only two things certain in life, death and taxes???

Clive, I don't think MIL's estate will amount to more than £200K including the loan, so I don't think inheritance tax will be an issue.

I just wish that there was some way that you could find out what your own particular LA do with situations like this before you have to make decisions that affect everyone's life. The CRAG guidelines are a rule of thumb that could be interpreted differently depending on where you live from what I have read.

 

[susanne1964]

Hi, If this is a little help I was told by dad's CPN that "If a care assessment was imminent and he gave away most of his money that would be depriving himself" I dont know if that is correct or not

take care
Sue
x

 

[Margaret W]

I've posted on this before. Maybe people have replied, but I'm not good at finding previous posts, and don't come on here as regularly as I did when my mum was alive, and people were just fantastic.

I don't have any problem with a parent having to use their home to pay care fees, and not leave it to their kids. I do have a problem with why they have to pay care fees at all, when they are diagnosed as being unable to remain at home (my mum was a night wanderer). It is not a case, for most of us, of having an elderly relative "wanting" to go into a care home cos it will be easier for them. Most of them don't want to go at all. They have no choice. Years ago they'd have been in an asylum.

But the main problem I have is continuity of care. What happens when the money runs out? I sold my mum's house (little terrace), to pay for her fees. Totally self-funding, nothing from the state other than Attendance Allowance. But I worried like mad as to what would happen when her money ran out (I reckoned about 8 years). Would she have to move to a cheaper and less pleasant home? Would such a move upset her? So I reorganised my finances on the assumption that in 8 years time I would need to pay top-up fees of around £500 a month to keep her where she was. I have to say it was a major worry for me. I didn't even like my mum, but I didn't want her to be upset either. So I resigned myself to spending £6,000 a year of my own savings (and I am a pensioner), to support my mum. It is this situation that should not be allowed. It is uncertainty that should be addressed.

Clive's advice is sound, I think.

But every case is different. Take professional advice. There are lots of bog standard family solicitors now experienced in this. You don't need to pay the earth for a specialist. Trusts do need more care and cost a bit more.

Margaret

 

[NewKid]

Hi everyone, thanks for your thoughts on this - my solicitor seems to think it's all water-tight but I will do the double legal check... always good advice!

The main point is, that IF your parent's property were rentable and could earn reasonable rent - without too much risk/ expense as obviously some properties are more lettable than others - this may be an alternative to selling and just putting the ensuing capital in a bank to dwindle to nothing over time?

In my Mum's case her house is not particularly lettable, so I want to invest in a much more practical property - the whole of the rent can then go to topping up her care costs. If the maths works this is hopefully the key to affording the care I want for her. (The % split in distribution of assets between survivor/ beneficiary was a provision in my parents' wills precisely to try and prevent 100% of value possibly being swallowed by care costs..I assume that this extends to investments made once the original home is sold, but am on it - will check. )

I do appreciate there are risks attached/ rental value varies and there are no guarantees with property (or indeed, lest we forget, with bank accounts these days ) ... But a property can always be sold, generally it does not depreciate.. which would take us back to square one of course with capital in a bank that will eventually dwindle away because the self-funding system demands it is so! And so the debate continues

 

[Clive]

I don’t know if this actually happens as I never checked it out myself but, a week after selling mum’s house because it would have cost a fortune to bring it up to a fit state to let out, I had a man round to mend the lawnmower.

We chatted and he told me that, when his mum went into a Care Home, he went round to the local “Housing Association” and had agreed to “let his mum’s house to them on a 10 year contract”.

He told me that the “Housing Association” had brought the house up to the required standard, kept it decorated, and found tenants. He said the rent he received was less than if he let the house out himself but he had no worries about rough tenants or not getting the rent etc.

I never had the need to check out this story, but if it were true it would offer a simple way of renting a rundown house.

Clive

 

[Bristolbelle]

Good point Clive....

Thinking about it many councils are bringing in initiatives to get vacant private properties on to the available to rent zone to ease the housing crisis. This could be an excellent way forward, and I think well worth investigating. You're a genius!

 

[NewKid]

It's true there are probably a few such little known options... it is not always easy to find them - or the necessary time and energy to follow through... but in the spirit of TP, always good to share in case it helps someone.

 

[bmw777]

Sound advice !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1

The poor get everything paid for,the rich can afford to pay for everything,and the middle of the road average person,well they work the hardest and pay the most.

I am going to sell my house and rent somewhere.I am going to buy art and give my children a picture or two!!!!

 

[jenniferpa]

Can I just point out that this is a 3 year old thread?

On that basis I am closing it.