How do I help my dad out financially.

bluenose1

Hi,
my dad is 64, living on just the basic Pension Credit with no savings and his only equity is a flat worth approx £60,000. He has left his flat to my sister and myself in his will.
I want him to have some money now as I know he is really struggling. I do help him out but I know he doesn't want to be regarded as a charity case.
I have thought about those equity release schemes for him but they seem like you pay an awlful lot back.
My sister is not in any financial position to help him.

Thoughts are going around in my head and I am considering whether it is possible for me to buy half his flat which will give him £30,000. I do not expect the flats value to rise as it is not in a very good area.

I want it to be fair on everyone as I know if I do this I will be losing out on the interest I would get from savings.
How can I do this and not lose out financially. I don't want to gain from it but at the same time want to protect my money.

I suppose I am thinking can I provide the "equity release."
If I did it I would get a solicitor to draw up some type of agreement.
Any thoughts would be most welcome.
Regards
Anne

Xbigman

Its fairly straightforward to buy part of your fathers house from him, just use a solicitor and have it all drawn up legally. If the house is only 60k there are no inheritance tax issues.
However there is likely to be a family issue. These things are very emotive and if you buy 50% of your fathers house and in his will he leaves half the equity to each of you, you will get 25% each. This is reasonably fair to all concerned. You lose the interest but get any increase in equity your half accrues. But if you are helping your father out you probably aren't really worried about that. Your sister may not see it that way. Her inheritance just dropped from 30k to 15k. This can and does cause real friction. Have a chat with her and see if she has a problem with you doing this. Thats where I would start.
Regards



X

Everest

Assuming the equity release is something your father would wish to pursue, I would like to say the following. As Xbigman says your sisters inheritance would drop, but not really because of an equity release provided by you, afterall your father's assets (which presumably all pass to you and your sister) are still worth £60,000 (£60,000 flat, £30,000 cash with owings of £30,000 to you = £60,000 net assets). The drop she would 'suffer' would come only because your father would be spending some of this money. I agree that you should discuss this with your sister, but the idea should be conveyed in such a way which says your father needs this extra spending capacity now. All very well you and her getting money from inheritance, but until such time as it becomes yours (and hers) it is your father's to do as he pleases. What would she rather, a tidy inheritance sum and her father living in penury, or a still decent amount and a father who has the money to live well?

bluenose1

Hi,
thanks for your responses. I am more than willing to buy 50% of my dad's flat which will give him £30,000. I feel so sorry for him trying to manage on a small pension.
Not sure how my sister will fell over that, but I think it is more important to give my dad some assets as at the end of the day they are "his" assets.

However I don't envisage that the property will rise in value as it is in quite a deprived area were they are building new property.

So being mercenary how do I go about not losing out on the interest I would have had on my savings? Can I get some type of agreement that lost interest could be taken out of the estate?

My savings are my husbands and mine. I don't think it would be fair to ask my husband to help my dad out financially with all our savings if we have to lose out financially ourselves. I don't want to gain I just don't want to be worse off. I know doing this reduces any potential inheritance anyway and I am not bothered about that.

It will cause inconvenience to us as we had thought about getting a new car and a loft extension over the next couple of years,

I know money is very emotive and the priority is to help my dad, but just not too sure how to proceed.
Regards
Anne

EdInvestor

May I suggest that you first pop down to your local CAB and make sure that he is not entitled to other benefits (council tax benefit comes immediately to mind) that he may not be claiming?

Run the plan past them and also the equity release idea and see what they say.All such advice is free. Age Concern is another organisation which may be able to make other suggestions.

He may be better to sell the flat and go into rented. But someone needs to do the sums on all the various options if he was to sell so as to get more income .

This site might be helpful:
https://www.entitledto.co.uk

baldbloke_2

I have to add that with £60k capital from the sale of the house your father would not receive any assistance towards the rent or council tax on his new home - nor would he continue to receive pension credit.

However at the age of 64 I wonder whether you have confirmed what amount he will receive as his Retirement Pension entitlement. You might find that he will be in a better position than you imagine - and reasonably priced rented accommodation may then be a possibility if the sums still do not add up.

This is a difficult situation made more difficult by the involvement of more than one potential recipient of any inheritance. I hope you can work together on this.

dillydilly

Just to re-iterate the point on any benefits. I'm in a similar position with my 63 year old mother, though in her case there's no equity - just the state pension, housing benefit, very small amount of council tax benefit, and a small workls pension left by her late husband. What is always apparent is that any attempt to boost her income is offset by loss of benefit - which I suppose is fair because benefit is designed for those who do not have the cash or equity. I even tried the Gambling Loophole idea for her (see other forum), and the council suggested that any long term activity such as this could have an effect on benefits !

The most significant things she's done for herself is giving up smoking after 40 years, and learnt to get by without a car - it was difficult but she acknowledges now she doesn't really miss them.

EdInvestor

Apply for the state pension forecast here:

http://www.thepensionservice.gov.uk/atoz/atozdetailed/rpforecast.asp

Jake'sGran

He will get his full pension when he is 65 and I assume this will be more than what he is getting now and the amount will depend on any extras accrued during his working life. Still, the basic pension is not enough so I feel sure there must be other things he can apply for. You could check on this for him. Is he in good health? If not, perhaps he could claim something in respect of that. The main thing I wanted to mention was that in this area I have come across a few people who have sold up their properties, usually terraced houses or flats and gone to live in sheltered housing schemes. Would that appeal to him? Would he be happy with accommodation providing only one bedroom bathroom, kitchen, lounge. A old pal of mine (deceased about two years ago) had a beautiful ground floor flat with a garden outside and he was always one for telling people how well off he was (£100.000 or so). So I assume there is no reason for him not to sell up and gain extra
funds that way.

margaretclare

Forgive me for speaking out of turn, but I think there's something wrong in people's thinking - here's a man who could do with extra money, he happens to own his own flat but because he's left it to son and daughter, either he or they are looking at it as though he hasn't the freedom to do what he likes with what he owns. In other words, you write a will saying what's to happen to anything left at the time of your death, but up until that moment it remains yours! You are under no obligation to give consideration to what your 'heirs' might think about it. There is no such thing as an 'inheritance' for anybody until a person dies, no matter what they might have promised beforehand or written into a will.

It seems to me that the best idea would be, as Jake's Gran suggests, sell up and go to live in sheltered accommodation, assuming that there is some where he lives. It would certainly be worth looking into. Dad would then have money which he could invest to produce an income to live on.

Equity release doesn't really work very well when you're as young as Dad.

Best wishes

Margaret

baldbloke_2

margaretclare wrote:

Forgive me for speaking out of turn, but I think there's something wrong in people's thinking - here's a man who could do with extra money, he happens to own his own flat but because he's left it to son and daughter, either he or they are looking at it as though he hasn't the freedom to do what he likes with what he owns. In other words, you write a will saying what's to happen to anything left at the time of your death, but up until that moment it remains yours! You are under no obligation to give consideration to what your 'heirs' might think about it. There is no such thing as an 'inheritance' for anybody until a person dies, no matter what they might have promised beforehand or written into a will.

It seems to me that the best idea would be, as Jake's Gran suggests, sell up and go to live in sheltered accommodation, assuming that there is some where he lives. It would certainly be worth looking into. Dad would then have money which he could invest to produce an income to live on.

Equity release doesn't really work very well when you're as young as Dad.

Best wishes

Margaret

I think you are correct in all that you say.

The notion of the house as an inheritance was only raised because the OP had considered buying half of the house and was concerned how her sister would view the prospect of this financial arrangement in the longer term.

The idea of the owner - Dad - selling up and living on the proceeds in rented accomodation is quite clearly the sensible option and will provide some capital and income if required.