Buying father's house to provide long-term care

[BaggyBloom]

Hi all,
I'm looking for some legal advice with regards to buying my father's house.
He is adamant that he wishes to remain at home until the end and does not want to go into a care home. I can help facilitate this but really only if I could buy the house at less than market value and use the shortfall to reconfigure the existing house and build an extension to provide a downstairs bathroom, bedroom and new kitchen.
My dad is undergoing tests to assess his memory at the moment as we are pretty sure he is in the beginning stages of dementia, but still has capacity to make decisions for himself.
He will not need social care and therefore there should be no issue with deprivation of assets. Could there be any other legal issues that I'm not seeing right now?
Many thanks for any advice offered.

 

[Shedrech]

hello @BaggyBloom
welcome to DTP

you may want to check this with the OPG, especially if you are Attorney for your dad
an Attorney must act only in thd best financial interest of the donor ie your dad, and must not gain from any financial matters .... so, strictly, you need to pay a proper market rate for the property

your dad can, of course, himself fund any refurbishment of his home .... should he need care at home, the property is disregarded in the financial assessment which only takes into account his income and savings .... it is taken into account should he move into residential care .... please don't dismiss this as a possibility, there may come a time when his care needs are such that they can no longer be met in his own home, even with a live in team of carers

 

[Veritas]

@BaggyBloom
This is a really difficult one. As @Shedrech says, you can't buy at below market rate if you are an Attorney. Also, there may be inheritance tax implications because if you buy at below market rate the difference becomes a gift and (depending on the overall size of your father's estate) known as a potentially exempt transfer - he would have to survive seven years to clear the liability. He would also not be able to live in the property without paying you a market rent on the gifted element.

You probably need expert advice on this, and it would be a false economy not to seek it. I would also add that if you have any family with an interest in your father's estate you need to tread VERY carefully indeed. The last thing you want is a lengthy and expensive dispute that destroys relationships along the way.

 

[BaggyBloom]

Thank you both for your replies.
I don't have power of attorney as we are very early in the dementia journey and I haven't so far felt it my place to say dad is no longer capable of making sensible choices himself. There are short term memory deficits but he is still capable in my eyes - we will know more however once his memory assessment is complete.
I do have a brother and sister who provide no care whatsoever and rarely see him. One is planning retirement abroad so will have no physical contact at that point and the other shows no interest. Everything has been left to myself and my husband. My dad will of course have capital from the sale of the property that may satisfy my siblings - not as much as if we hadn't bought the house but certainly a decent amount.
The whole estate is well below inheritance tax issues to crop up, so that wouldn't be an issue.
The thing that bothers me, is that my husband and I willingly do everything for him and want to facilitate his wishes but our financial futures will also be very insecure without some kind of plan to see us through the caring years and out the other side.
There will be no help for us whilst my siblings will be secure with jobs that provide a decent pension etc.
So there is an element of looking at the situation long term for both my dad and ourselves.

 

[canary]

I can understand your desires, but I honestly think that there are too many legal pitfalls in your plan to not get expert advice.

I also think it would be a very bad idea to assume that you will be able to look after your dad at home for the whole of his life. My mum moved into a care home and although OH is still at home, I am fully expecting my OH to have to at some stage. You are only at the early stages, but you only have to read around this forum (particularly those threads on middle stages) to see what might be ahead. Not everyone gets things that you will read, but it is only the minority of people who manage to stay at home (even with family) until the end. You might manage it, but dont bank on it.

 

[Veritas]

@BaggyBloom
I echo what @canary has said - you need to consider all the possibilities. My aunt died at home after some years with dementia but the only way that was possible was because they had a live-in carer (expensive, but not as bad as a nursing home would have been for a self-funder). She was also relatively easy to manage, sadly not true of everyone in this situation.

Also, just because your siblings seem reasonable at the moment, don't assume they will continue to be. You need to protect your and your husband's position and eliminate all possible causes of misunderstanding and dispute if you possibly can. There is no reason why you should sacrifice your future financial security and it is perfectly reasonable to want to make sure you don't.

I hope you mean than an LPA is in place, but not activated yet? If one hasn't been done, please do not hesitate to get on with organising that now, whatever else you do. Life without an LPA in place for when you need it can be very difficult as well as expensive.

All of which is a long way of saying that some specialist advice now would be a good thing - for all of you.

 

[Lynmax]

Thinking outside the box, if you bought the house at market value, would your dad agree to fund the necessary work from his funds? That might be the same as if you say paid 20k less then spending the 20k on the work. For example house worth 100k, you could pay £80k and then spend £20k on improvements. Or pay £100k upfront and your dad spend the £20k instead. I've probably not understood all the legal aspects but it seems to work for me!

As regards LPA's, my mum did hers as soon as she got her diagnosis but the process spurred me to sort out LPAs for myself to prevent my children from worrying as I did. I updated my will at the same time as my old one was written 20 years ago when I got divorced and my children needed trustees as they were only teenagers.

I now feel very pleased that everything is in place to make things easier for my children whatever happens.

 

[jaymor]

I have had a LPA for the last 15 years and it’s also registered. I look upon it as insurance, it is there should it be needed. Not necessarily for dementia alone,

I must admit prior to my husband being diagnosed we never thought of LPA but as soon as he was diagnosed we both had one drawn up. My son holds a copy of mine.