purchased parents property instead of equity release

lro5hhy · 23 December 2014 at 12:31AM

Hi can anyone give me some advise

i purchased my parents house 14 years ago for the same value and on the same understanding as an equity release company had quoted them, as i had come into some money. I thought it was good for them as they had a mortgage given to them in there 70's which they could no longer afford and needed to release the equity to pay it off h and it seem a good long term investment for me.

Fast forward 14 years ,they are now both in there late 80's and need to go into care (cant be seperated understandably). They have enough funds left to last maybe 10 months @ 1500 per week.

Im now worried what will happen when they have used all there savings?

Savvy_Sue · 23 December 2014 at 1:41AM

What advice were you given at the time? Have your parents been paying rent? You may need to get independent advice.

Biggles · 23 December 2014 at 10:14AM

Surely they received more than £15k for their house (or maybe a little over £10k, as the £1500pw must include their pensions)? What's happened to their money over these 14 years and how much is left?

But the final answer is likely to be a local authority-funded care home.

getmore4less · 23 December 2014 at 11:59AM

Sell the house and help them out.

Might have to take a CGT hit.

Rent the house out to create some income to help them out.

Could you look after them.

Linton · 23 December 2014 at 5:38PM

You should talk to the local authority social services. They will have a standard procedure for an assessment of needs and ability to pay. The local authority will contribute sufficient to ensure that they can afford something appropriate for their needs. It would be a good idea if you research and visit local care homes to find one you would be happy for them to go into.

See here for more info.

lro5hhy · 23 December 2014 at 10:22PM

We paid what the equity release firm were offering which was 50%, so 50k. We also paid stamp duty at market price. They paid off there mortgage of 15k and banked the rest. They now have about 80K inc which must be pension over the years.

It was all done above board, in good faith. We have thought about paying some of the fees from any rent we could receive from the house, but this wont be enough to cover all the cost of nursing care.

Mojisola · 23 December 2014 at 10:35PM

lro5hhy wrote: »

We have thought about paying some of the fees from any rent we could receive from the house, but this wont be enough to cover all the cost of nursing care.

Your parents will be assessed on their own capital.

If they are funded by the local authority, they will go into homes that accept people at the LA funded level (which is normally very low).

If you are able to pay top-up fees (perhaps from renting the house out), you can sign up to add money to the LA funds and they could go to a better home but that is a massive commitment. You need to be sure you will always be able to afford the top-up fees.

getmore4less · 24 December 2014 at 1:14AM

lro5hhy wrote: »

We paid what the equity release firm were offering which was 50%, so 50k. We also paid stamp duty at market price. They paid off there mortgage of 15k and banked the rest. They now have about 80K inc which must be pension over the years.

It was all done above board, in good faith. We have thought about paying some of the fees from any rent we could receive from the house, but this wont be enough to cover all the cost of nursing care.

AIUI there should have been no stamp duty(threshold was £60k in 2000) and it is paid on the consideration not the full value.

With a puchase at 50% value there is still the risk of a deprivation of assets assesment.

twokcc · 20 January 2015 at 9:08PM

lro5hhy wrote: »

We paid what the equity release firm were offering which was 50%, so 50k. We also paid stamp duty at market price. They paid off there mortgage of 15k and banked the rest. They now have about 80K inc which must be pension over the years.

It was all done above board, in good faith. We have thought about paying some of the fees from any rent we could receive from the house, but this wont be enough to cover all the cost of nursing care.

They will be individually assesses for the care home fees. Unless evidence otherwise will be considered to have £40k capital each and any pension (or other income) will be taken account of). They will have to pay care home fees in full until capital falls to about £23k (reduced amount then payable) until capital falls to about £14k after which the local authority will pay the fees.
The capital value of the house should NOT be taken into account if the deeds show you are joint owner. Many councils will include the house value- post again if this happens and I will find you revelant information
HTH
If they are self funding may be able to claim for attendance allowance which will reduce the rate at which the capital is depleted.

twokcc · 20 January 2015 at 9:11PM

[QUOTE

With a puchase at 50% value there is still the risk of a deprivation of assets assesment.[/QUOTE]

14 years ago so would think that this would be highly unlikely

missile · 21 January 2015 at 12:17AM

Who owns the house?

purchased parents property instead of equity release

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