House Equity as Pension

lisyloo

I believe that as long as you do not require LA funding for care homes within 6 months of a disposing of an asset then in all reality they cannot recover it.

If that belief is founded on a thorough study of case law and professional advice, then fair play.
If it's not then I would suggest you look into it very carefully.

is holding it for the state till they need it.

Well acutally it's until YOU need it.
You see you are responsible for looking after yourself.
The state is not.
They only act as a safety net and pick up those that cannot.

Id be interested to hear what Human Rights lawyers have to say on the issue given the the European Charter clearly states we have the right to own posessions.

It's not about owning possessions.
If they keep their house there is no issue.
It's when you give them away when you might need them that it becomes a issue.

I understand that would mean the right to do with it what you like?

I'm not a human right lawyer and I'd be interested too.
But I know if you get made redundant then you cannot give your redundancy away or have an extravagant lifestyle and then expect state benefits.
I totally agree with you that having a holiday is not extravagant and that isn't what I mean.

So yes, you can do what you like with it.
But you cannot then expect to fall at the mercy of the British tax payer.
It has not yet been challenged in the court of human rights.

I would suggest you get professional advice for ALL your sakes.

property.advert

I know I don't garner much support but my belief is that people should not be screwed over for saving a bit along the way when those who simply squandered what they had or worse still, spent a lifetime on benefits, all get the same assistance in the nursing care stakes. I find that inequitable and thus have formed the viewpoint that anything you can do to retain your accumulated wealth is ok and to hell with the morality of it all.

I'm quite sure a decent legal brain can get around all problems in this field and perhaps the solution is a quick visit to a decent solicitor, preferably one who has the same sense of fairness.

mrcharrington

The 6 months was not a guess - taken from AgeUK factsheet 40.
4 [FONT=Arial,Arial][FONT=Arial,Arial]Powers of recovery [/FONT][/FONT]
Under section 21 of the [FONT=Arial,Arial][FONT=Arial,Arial]Health and Social Services and Social Security Adjudications (HASSASSA) Act 1983[/FONT][/FONT], where a resident has deliberately deprived himself or herself of an asset the local authority can recover any sums it consequently has to pay towards the resident’s care costs from the person who the asset was transferred to, as long as the deliberate deprivation occurred within six months of the resident approaching the local authority for funding. If the transfer was made more than six months before the local authority cannot use this section.

My parents have never been a parasite to the tax payer, rather that those in my previous post have been feeding off their hard earned money for the last 45 years to the tune of 76% of everything they earn. I'm amazed how easily people are duped into believeing that the state are somehow this safety net when you get old - mainly thanks to articles in the Daily Mail written by some potty pompous middle class !!! who was born into privilege.
They have paid NI contributions since they were 15 so they have more than earned the right to have a few on the taxpayer.

PA I would suggest your view would be the view of the majority (well those who never had a silver spoon thrust into their mouths). Its only since the mouthy upper middle classes became the new aristocracy and competely dominate the political landscape that these views are now denounced by every media outlet.

mrcharrington

I note that my parents can hand over their deeds to a sleazy equity release firm costing 30% of the value, blow all the money on a bender and allow them to make a huge profit when they die. Clearly the company will be registered in a nice tax haven abroad thereby paying 0% tax and no one seems to have a problem with it. But then these huge corporations are having it hard at the moment arent they.

Were all in it together!

Wilma33

It might be easier for the four of you to just buy your parents a nice cruise?

noh

mrcharrington wrote: »

The 6 months was not a guess - taken from AgeUK factsheet 40.
4 Powers of recovery
Under section 21 of the Health and Social Services and Social Security Adjudications (HASSASSA) Act 1983, where a resident has deliberately deprived himself or herself of an asset the local authority can recover any sums it consequently has to pay towards the resident’s care costs from the person who the asset was transferred to, as long as the deliberate deprivation occurred within six months of the resident approaching the local authority for funding. If the transfer was made more than six months before the local authority cannot use this section.

My parents have never been a parasite to the tax payer, rather that those in my previous post have been feeding off their hard earned money for the last 45 years to the tune of 76% of everything they earn. I'm amazed how easily people are duped into believeing that the state are somehow this safety net when you get old - mainly thanks to articles in the Daily Mail written by some potty pompous middle class !!! who was born into privilege.
They have paid NI contributions since they were 15 so they have more than earned the right to have a few on the taxpayer.

PA I would suggest your view would be the view of the majority (well those who never had a silver spoon thrust into their mouths). Its only since the mouthy upper middle classes became the new aristocracy and competely dominate the political landscape that these views are now denounced by every media outlet.

I think you need to read all the fact sheets and understand them.

It is true that the local authourity cannot normally recover the asset if the deliberate act of deprivation had taken place more than 6 months previously.
However the value of the assests will still be taken into account when making the assessment. Therefore no contribution would be made by the council as assets would be greater than the threshold.

noh

mrcharrington wrote: »

I note that my parents can hand over their deeds to a sleazy equity release firm costing 30% of the value, blow all the money on a bender and allow them to make a huge profit when they die. Clearly the company will be registered in a nice tax haven abroad thereby paying 0% tax and no one seems to have a problem with it. But then these huge corporations are having it hard at the moment arent they.

Were all in it together!

If they did blow all the money on a bender that too could be seen as deliberate deprevation of assets.

mrcharrington

Thanks for the help so far. Ive spoken to them today to clarify the situation.

As i said mum still works and is 65
Dad is 73 and well retired.

Turns out that dad has some savings mainly from his mums inheritance (she was 90 odd).

So with some in ISA's , a bit in a guarenteed saver and a bit less in an instant saver he has around 39k. Hes not quite grasped the fact that he is retired and is banging on about making a massive £800 pa in interest and how he wants to leave the grandchildren something. Ive told him he should do something for them now so he can see them enjoy it.

Turns out mum has not drawn her state pension since turning 60 and is owed around £19k after tax which she will take as a lump sum.

They would like a new caravan and i suggested taking a cruise whilst also putting something away for the brats.

I thought maybe we could buy 50% of the house on repayment mortgage and charge them market rent for that 50% (which i believe is fine). As the whole family uses their caravan for the odd weekend and has done for some years perhaps we could then purchase it between us 4 siblings as our treat for them bringing us up.

Comments welcomed?

jamesd

Only £800 a year? Pretty bad. Should be getting something more like the £2300 or so he could get from income-producing investments in a stocks and shares ISA, tax free.

It's good that your mum waited five years before taking the state pension, the optimal time is between three and five years. Unfortunately the optimal choice for someone who doesn't have bad health is to take the higher income, not the lump sum. She might not know that half of 65 year old women in ordinary health will live to 88 or older, another 23 plus years.

What's the point of buying half of the house? Is it so they could have a higher income and you write off the capital value, so they are able to spend it over time to give a higher income? If that's the idea then if I assume that your mother lives for another 30 years and invest the money for income as well as just draining it then they could perhaps take £5600 a year in extra income, exhausting the capital at the end of that 30 years. Less whatever rent you charge, which is likely to be something in the £4500 a year range, depending on local rents. So maybe £1,100 a year better off. I'm not sure that's worth doing unless you're trying to dodge care home fees. Usually easier for family just to arrange to pay standing orders of £23 a month from each sibling to achieve the same level of extra income.

Savings accounts are inadequate tools for this.

mrcharrington

My main concern is that before Dads health gets any worse he enjoys some of his money. He thinks hes doing well with his £800 pa and keeps banging on about leaving his grandchildren something. I would prefer he releases some of the equity in his house (avoiding the dodgy firms), buy a new caravan or holiday home and put the rest to work.

Would you recommend releasing some of the equity and buying an annuity or is your idea of stocks ISA's a better return.

Cant help feeling nervous about stocks given the state of play currently.

Thanks for all the help