Lending or Giving money to parents to be repaid out of their estate on death?

theradfords

Is it possible to safely lend money to my parents.


They own their house outright, but have little or no spare cash.

I would like to 'give' them some money to spend during their retirement ( they are in their 80s).

I would not want interest.

However I would only want to ensure that on their deaths the money was repaid to me on the sale of the house, prior to the estate being split between the relatives.

is this possible?

thanks in advance for any help

p00hsticks

The obvious way that I can think of is for them to legally sell you a part of their property. I'm no expert but provided you pay them the market price then I don't believe there will be any Inheritance tax or DWP 'deprivation of capital' issues.

Potential (sort of ) down side for you is that if the property rises greatly in value then you might be liable to CTG (although you'll be making a good profit for that to be the case, so not THAT much of a down side).

Potential down side for them is that if you end up in financial difficulties / bankrupt or with anyone chasing you for money, they could end up having to buy you out or face the house being sold....also them having a chunk of caash in the bank would affect any means tested benefits they might be claiming.

scottishblondie

Surely they could just write into their will that you are to receive £X out of the estate, then the remainder is divided up? Of course this would only work as long as there is an estate to divide up, so problems are likely to arise if the house has to be sold to pay care costs etc.

z1a

Would an equity release plan not be any good to them?

geoffky

z1a wrote: »

Would an equity release plan not be any good to them?

NO....and that's the same for 99% of other people who are asset rich and cash poor...

p00hsticks

scottishblondie wrote: »

Surely they could just write into their will that you are to receive £X out of the estate, then the remainder is divided up? Of course this would only work as long as there is an estate to divide up, so problems are likely to arise if the house has to be sold to pay care costs etc.

Also, looking on the pessimistic side, there is nothing to stop them then changing their will later without the OP knowing, so it doesn't protect the OP's money.

Xbigman

And of course there is the issue of them going into care and the house being sold for that.

The only sensible way to do this is to buy a portion of the house, using a reputable solicitor experienced in these matters. Buying 25% is not onerous on either party.
Make sure all relatives/beneficiary's of their will are notified of what you are planning. It will save a lot of family grief later.




X

theradfords

p00hsticks wrote: »

Also, looking on the pessimistic side, there is nothing to stop them then changing their will later without the OP knowing, so it doesn't protect the OP's money.

good point - I had not even considered that one.
thanks

theradfords

Xbigman wrote: »

And of course there is the issue of them going into care and the house being sold for that.

The only sensible way to do this is to buy a portion of the house, using a reputable solicitor experienced in these matters. Buying 25% is not onerous on either party.
Make sure all relatives/beneficiary's of their will are notified of what you are planning. It will save a lot of family grief later.




X

this sounds like the best idea - do you have any idea how much a solictor would cost? I would only want to lend about £10,000, so that would only be about 5% of the house value.
thanks

Xbigman

A work colleague bought half his fathers house and it cost £620.00 in fees as I recall. The solicitor was pretty on the ball and covered everything from setting up a paper trail to prove the money actually got paid, to informing the brothers and sister (who went ballistic).
There was a complication with the dead mothers will having some obligation that her half the house had to be split between the four children, which upped the cost a bit. The solicitor was actually paid by the father.
You should probably make a few phone calls and get some quotes.




X

Caroline_a

If you set it up as a loan, repayable on death of the last survivor then that will be paid out of the estate before any inheritances etc. Probably best to get it legally drawn up, but I'm fairly sure that even if the house has to be sold if they go into care you could probably add that to the details of the loan so that you will be paid out first.