Jointly inheriting a property

WarriorPrincess

I'll try to keep this short, but its complicated. Background (posted previously): oh's dad is v. ancient & has Alzheimer's. He's looked after at home by resident carers & it will shortly be necessary to draw on some of the capital in the house in order to go on paying for care. In his will OH gets 1/4; Bro gets 3/4.

I very much hope oh's dad will be with us for a long time yet - but given his age & health it's likely to be less than 5-yrs (& tbh it could be next week). I've looked at income & costs & even if he's with us 5-yrs there's going to be a v. valuable property & significant Inheritance Tax to be paid, as well as some sort of equity release debt to be sorted once he goes.

Bro may want to live in the house ultimately. He believes it would be worth a great deal more done up (needs entire new heating system, etc). We agree, but feel a developer would be best placed to do the work. Bro wants to spend money on the house now. We think this would be unacceptably disruptive for oh's dad, & have said so - but Bro very often gets what he wants. oh & Bro have EPA. We feel raising money on the house (at a cost) then spending it to improve the value would be a bad investment too as 40% of the value increase would eventually go in Inheritance Tax. And we feel Bro spending his own money to make improvements to the house might 'muddy the water' over ownership when it comes to dividing the estate. Is this right?

Other questions: If a property is left to more than one person, can one decide they want to keep it / do it up, & stop the distribution of the will until the house is ultimately sold? (Raising money on it in the meantime to pay off IHT & Equity Release debts - & possibly to finance the work on the property).

oh would be happy to wait a couple of years before getting anything, to avoid arguments. Would that be allowed legally? (I think it's a completely bananas idea, but that's by-the-by). Or will the lawyers insist the property is sold to cover debts & allow distribution of the proceeds?

I know we'll need legal advice when the time comes, but we know next to nothing about things like this & I'd like to be as prepared as possible to try to avoid awful family battles.

(If this would be better posted in another place, please let me know where).

yelf

Well the equity release will be payable if he ever goes into a care home or dies, and the lender will have a chrge on the property. Yes increasing the value so close to death is stupid if the iht position is as you think (what is the value, what about OHs mum?) - but ultimately the will leaves 1/4 to OH, so if bro spends money on it - it is his problem if OH benefits

WarriorPrincess

Yikes!! I was assuming equity release could be used to fund care home fees if he ever has to go into a care home - is that not the case?

The value of the property is c. £1.3 - £1.6 million!!!!!!! (Tho' that will be reduced by the amount of the released equity). oh's mum passed away a little while ago.

Will the lawyers who eventually deal with the will insist the house is sold to divide up the proceeds, or will that decision be left between the beneficiaries?

yelf

ultimately the sale quesiton will be down to the beneficiaries. You may want to check the Equity Release terms, but as a qualified Equity Release professional, one of the stipulations is entering LTC ( as with moving house and dieing)

WarriorPrincess

So if a person has a house and wants to draw on it, but not sell it, to fund long term care, and the care can't be funded by equity release, how could it be done? I can't see oh's dad being granted a mortgage!

I hope he will remain at home, as he knows his way around and can have most freedom there, but as the Alzheimer's progresses this may not be possible. I'd always assumed he could go into a home if he had to - surely he wouldn't have to sell the house first? (He has very little capital left apart from the house).

yelf

WarriorPrincess wrote: »

I'd always assumed he could go into a home if he had to - surely he wouldn't have to sell the house first? (He has very little capital left apart from the house).

Dont be naive. Why would the local government pay for a millionaire'as care costs??

"So if a person has a house and wants to draw on it, but not sell it, to fund long term care, and the care can't be funded by equity release, how could it be done? I can't see oh's dad being granted a mortgage!"

There is no alternative other than loans etc - which he wouldnt get. Equity release can be used to fund care, but if he goes into a care home then he will have to pay back the loan. Anyone who owns more than £23000 in England has to sell all of their assets down to £23,000 before the state paying anything. Welcome to reality.

Loughton_Monkey

WarriorPrincess wrote: »

So if a person has a house and wants to draw on it, but not sell it, to fund long term care, and the care can't be funded by equity release, how could it be done? I can't see oh's dad being granted a mortgage!

I hope he will remain at home, as he knows his way around and can have most freedom there, but as the Alzheimer's progresses this may not be possible. I'd always assumed he could go into a home if he had to - surely he wouldn't have to sell the house first? (He has very little capital left apart from the house).

I think he means 'enter LTC' in the form of go permanently into a home. I know from your previous posts that the plan is for him to continue receiving LTC in his own home. Assume you have Lasting Power of Attorney, and so I would have thought (but don't know) Equity Release is still possible.

Most of the other Q's seem to belong more on a legal forum. I seem to recall being told that executors of a will are basically bound to turn everything into 'cash' - or at least this is the default situation (barring specific bequests naming possessions or property). I really don't know what happens if a house is left 1/4 to one and 3/4 of the other, if neither party can decide which one is going to buy out the other. But I agree upgrading the house significantly now, is a bit of "shooting oneself in the foot" from the Inheritance Tax Angle.

If there are professional people currently named as executors on his will, it might be worth asking them for some clarification of what they would do. Certainly they will have a legal obligation to pay IH from the estate. If that means selling the house then that would have to be done.

WarriorPrincess

Yelf, I had thought you understood the situation I had tried to explain, however I now see I was quite mistaken. I have never at any point suggested the local government would be contributing to care costs. oh's dad pays for carers at home at present; if he ever had to go into a home it would obviously be at his own cost as he owns a very valuable property. I am not naive. You have given answers to a post you had not fully followed.

Your first post here seemed to say equity release couldn't be used to fund care home costs. Your 3rd one says it can. Obviously all released equity would be a loan that ultimately has to be repaid. Equally obviously, someone who is very ancient and owns a hugely valuable home is highly unlikely to get down to anywhere near his last £23,000, so there is no question of state contribution to his care costs.

I am not sure if you have tried to be offensive in your last post, but it reads that way. I am posting about a very vulnerable old man who I would like to ensure has whatever care he needs for as long as he is with us. Also about a very difficult family situation which I would like to resolve amicably if possible. I am thankful for all constructive advice.

margaretclare

For heaven's sake. Absolutely the very last thing that should be contemplated for an Alzheimer's sufferer, living in his own home, is any major redevelopment/refurbishment/redecoration. They cannot cope with any upheaval. Even taking them on holiday, to a strange place, different people, things going on around them, is to be avoided. Ask the Alzheimer's Society if you don't believe me. Any major change in their routine freaks them out and makes them many times harder to deal with.

This man has not yet died. He's living in his own home, which he has a perfect right to do. An inheritance only comes into effect AFTER death. This kind of 'what if' is like vultures hanging over a not-yet-quite-dead corpse. You possibly agree with me, so your job would be to get this through to the brother who seems to see it quite differently.

sleepless_saver

WarriorPrincess wrote: »

Yikes!! I was assuming equity release could be used to fund care home fees if he ever has to go into a care home - is that not the case?

If you were able to do another equity relaese (it sounds like one has already been done and you need to find out about existing charges on the property) then you could use the funds released to buy an immediate needs annuity. You got info on those in your earlier thread.

The alternative if your father has to go into care and the EPAs don't want to sell the house, is to rent it out if that income would be enough to cover the gap between his pension and the care costs.

Or family members could club together to pay the shortfall. After all, if you are beneficiaries you will get it back eventually. That may be better financially for you in the long run than the equity release option.

WarriorPrincess

Pondering this over the last few days has been very useful - thank you to all who have contributed. I've realised this morning that oh's dad has another asset that could be sold to cover the care costs shortfall for quite a long while without drawing on the value in the house. I can only say that the finances of the mega-rich are a revelation!

I absolutely agree that he should have the care that's best for him, & I'm doing all I can to ensure this happens. But the costs of care have to be met somehow & I'm trying to make things easier for family members & avoid conflagrations by finding out the options.

Although, on paper, oh could eventually get a huge enormous legacy, I'm laid-back about this as I have a feeling that it somehow simply won't happen. In the meantime, the primary focus is ensuring we have the ready dosh to pay care costs.