Beneficiary in Will - Help Needed.

TomMedia

My aunt (93) has shown me her will, stating that upon her death, I will receive her house and the remaining estate will be split equally between my two children and a charity. She has just recently been taken into a care home and is funding this herself from her pension income and attendance allowance, topped up from her savings. She has enough savings not to have to sell her home immediately. However, when she has used all of her savings, her property will have to be sold to continue funding her stay in the home. My question is this: If/when this happens, does this money then become part of the remainder of her estate and is then divided between the three parties upon her eventual death, or is there a way of protecting the house proceeds so I at least receive the remainder after paying for the care? This might sound a bit mercenary, but I just want to know where I will stand. The total value of the estate will not attract IHT.

localhero

Hi TomMedia,

It really depends on the precise wording of the Will.

As this sitation may not have been envisaged when the Will was drawn up I suspect it says something on the lines of: I give my property known as.....or the house that constitutes at my death my principal private residence to.....

Residue to A, B & C etc.

In which case if the house is sold prior to death, the gift of the house will fail and the estate consisting now of savings will be divided as per the residue of the estate.

You are therefore right to be concerned as your aunt's intention of giving her house to you will have failed.

There are 3 options available to your aunt. 1) She makes a new Will to take into account the change in circumstances (provided she has the required mental capacity); 2) you ensure the house is not sold to pay for care fees. Some local authorities will defer their fees and simply place a charge on the property; or 3) the property is let to provide an income to pay the fees - though here I suspect the income would be insufficient to cover the fees.

More of a last resort option is if there is a relative living at her property who is aged over 60 or is incapacitated the house has to be diregarded when assessing liability for the fees.

It might also be beneficial if your aunt made you her Lasting Power of Attorney so that you can help manage her financial affairs.

You have some food for thought now so good luck.

TomMedia

Thanks LocalHero,
You have confirmed my thoughts. Options 1 and 3 are not practical, so we must find a way to keep her property unsold for as long as possible. Maybe raising capital on our own house to pay for her care would be the way to go - that way we could repay that money when the inevitable happens.
We are arranging LPA with her at the moment, so thanks again for the advice.