Parents Home & future care costs

mgn

Hi all,
Newcomer to this site and I'm not sure ive posted this thread to the right forum. So please forgive me if ive got it wrong.
My question is this....
My parents are both alive and live in their house, which has now been paid for in full.
Sadly my father is not in the best of health, and although dreadful to consider, my brothers and I are aware that he is likely to pass away before my Mother.
My Mother is in relatively good health and would undoubtedly continue to live in her house after my Father passes.
However my brothers and Parents are aware that there is always the possibility that my Mother, in the future, may require residential care. Of course my Brothers and I have of course all said that our Mother would be very welcome to live with us if the need arises. We are aware though that none of us are professional carers, and we may not be able to offer the care necessary in the future.
My parents are eager to have the price of their house spread between my brothers, their grandchidren and I within their inheritance. However they are concerned that if the need arises, then the Government would take all the money their house is worth for residential care.
Is this the case?
Could my parents, without breaking any laws, transfer ownership to my Brothers and I, whilst continuing to live in the house as long as they want? What are the inevitable pitfalls? Will this mean that the Government would then pick up the cost of any care required?

Any advise you can offer would be really appreciated. My parents are expecting my Brothers and I to advise, and frankly we simply aren't qualified to do so.
I suspect that we are not the first to encounter this issue.

Thanks

Mike

jem16

mgn wrote: »

My parents are eager to have the price of their house spread between my brothers, their grandchidren and I within their inheritance. However they are concerned that if the need arises, then the Government would take all the money their house is worth for residential care.
Is this the case?

Yes it can be used.

Could my parents, without breaking any laws, transfer ownership to my Brothers and I, whilst continuing to live in the house as long as they want?

No it would be seen as a gift with reservation and deliberate deprivation of assets.

Best answer would be for your parents to organise the ownership of their house as Tenants in Common. On first death half of the house is left to the family. If the 2nd person then needed care it would be difficult for the council to use the money from half a house.

dunstonh

Could my parents, without breaking any laws, transfer ownership to my Brothers and I, whilst continuing to live in the house as long as they want?

Not only could the local authority claw it back into the estate it would also fall foul of IHT rules and possibly create a CGT liability as well.

There are ways, and Jem mentions one of them. However, if care is already known to be required or possibly required in the future then it is too late. any actions taken after it is known could be considered deprivation of assets.

sloughflint

I don't quite understand the above post about being too late.

If parents are of sound mind and that is their primary aim, they can get Wills written that happen to be care fee efficient.

http://forums.moneysavingexpert.com/showpost.html?p=16007129&postcount=11

dunstonh

If you know care is needed then any action taken to get benefits is considered deprivation of assets.

It is important not to mix up inheritance tax avoidance (which is legal) with local authority care mean test evasion (which is not legal).

Robert_Sterling_3

Your mother has an Asset which could, should the need arise, be used to contribute towards the cost of her care.
The longer her children are able to keep her in her own home the better for all concerned.

sloughflint

dunstonh wrote: »

If you know care is needed then any action taken to get benefits is considered deprivation of assets.

It is important not to mix up inheritance tax avoidance (which is legal) with local authority care mean test evasion (which is not legal).

I don't see it the same way as you.

Life Interest Wills many years ago were IHT efficient. For a while, that stopped being the case, but now it could be argued that they are in fact more IHT efficient than DT Wills and certainly simpler to deal with after the first death.

So with that in mind,how could people embarking on these types of Wills be accused of intending to deprive themselves of assets? I see the care fee efficiency of these Wills as a convenient consequence.

Not my cup of tea but as OP demonstrates, many people do want to mitigate care fees.It is only fair to let people know what is available to them and not infer that it is illegal.

Also, even though I do not see it as a problem, there is nothing in Op's post to suggest that care is imminently required.

mgn wrote: »

My Mother is in relatively good health and would undoubtedly continue to live in her house after my Father passes.
However my brothers and Parents are aware that there is always the possibility that my Mother, in the future, may require residential care.

They can quite legitimately plan ahead without fear if that is what they wish.

dunstonh

It is only fair to let people know what is available to them and not infer that it is illegal.

Except it is unlawful to take an action that is solely for the purpose to remove assets from the estate for the local authority means test.

We are not allowed to document anything for that reason. It can be another reason and that is fine but it cannot be for local authority care.

Anything that documents that it is for local authority care means test avoidance just gives the local authority an excuse to bring it back into the estate whether it was done last week or 10 years ago. Anything that is documented for another reason but has the consequence of not being included will not be brought back into the estate (as long as its valid).

Take a read of: http://www.ageconcern.org.uk/AgeConcern/Documents/FS40Transfer_of_assets.pdf

Baggysdad

Any transfer by Will occurs on death. And a dead person doesn't need care. So knowledge of an impending need for care is irrelevant. It follows that if BOTH homeowners go into care, no provisions in a Will will have kicked in and the house could still be assessed for care fees.

To the OP - there are solutions - too complicated to discuss in any detail here. Get your parents to a solicitor or Willwriter who knows what he is doing. Look for a solicitor who is a member of Solicitors for the Elderly or STEP (Society of Trust and Estate Practitioners) or a Willwriter who is a member of the Institute of Professional Willwriters.

B

EdInvestor

jem16 wrote: »

Best answer would be for your parents to organise the ownership of their house as Tenants in Common. On first death half of the house is left to the family. If the 2nd person then needed care it would be difficult for the council to use the money from half a house.

Justr one additional factor: the wills should be written so that on the first death, the surving parent gets half the property, and the other half is left in trust for the children - not to the children directly.This is necessary to protect the surviving parent in case one of the children is made bankrupt or gets divorced and there is a claim on the asset, which could cause the surviving parent to be forced to leave the home. The trust will prevent this and also have the desired effect of making the property unsaleable.

Go to a solicitor or will writer to get the mirror wills/tenants in common change /trust deed sorted.

mgn

I just wanted to say Thanks to everyone who has replied. Valuable information. Thank you for your advice.

MGN