Father in law has incurable illness, how to look after mum's assets?

itcanbedone_2

Ohhhh where to start.

My husbands father has been diagnosed with terminal cancer, one which he will most likely be compensated for, but we have been told he has only months to live. he is in his late 70s.

Quick as a flash we want to move them to live close to us, and they have just enough savings to buy a small house without selling theirs, so they can move in at their leisure. When they are comfortably moved, they want to give the two children (my husband and his brother) the original house, or sell it and give them the money.

I know if the mum needs care in the future, the government can claw this back. She says she will have her smaller house as an asset, and some savings, so she doesn't think this will be a problem, but I'm not so sure. I've also heard that it could be classed as income if my husband is given some money, and then he will have to pay tax. the amount falls way below the inheritance tax threshold.

could someone please explain the rules to me. I'm going round in sad circles.

dzug1

If the ultimate estate, including any gifts, is below the IHT limit then there will be no tax to pay. Full stop.

I've also heard that it could be classed as income if my husband is given some money, and then he will have to pay tax

Exactly what could be classed as income? I think you are confusing this with an entirely different scenario.

The deprivation of assets is the big issue here. I don't profess to give advice on that

Magnolia

Sorry to hear about your sad news.

If your fathers illness is classed as an industrial injury then get the claim in sooner rather then later. My father had Asbestosis and it took quite some time for his payment to come through. He also had industrial diseases benefit paid weekly.

Make sure he gets all he is entitled to as soon as possible. It can be put away for your mums future.

DIAL were invaluable when we were dealing with dads illness.

Nicki

I assume that the father contributed more to the financing for the house than the mother, given their ages and societal norms at the time. I'd therefore suggest that they sever the joint tenancy in the amounts each contributed, and that the father leaves his share of the value of that house to his children in his will. That will mean that this pot of money never belonged to your mother and so she cannot be said to have deprived herself of this asset for the purposes of care. If the value of the property falls below the IHT limit that would be the best way to deal with it, as there will be no tax consequences for anyone.

troubleinparadise

Sorry to hear your sad news.

If this hasnt already been addressed, It would also be prudent to set up power of attorney for MIL to act on FIL's behalf if necessary should he become too unwell to handle finances/bank for himself, and perhaps transfer utilities etc into her name so that there is less adninistration when times are more stressful later.

John_Pierpoint

Nicki wrote: »

I assume that the father contributed more to the financing for the house than the mother, given their ages and societal norms at the time. I'd therefore suggest that they sever the joint tenancy in the amounts each contributed, and that the father leaves his share of the value of that house to his children in his will. That will mean that this pot of money never belonged to your mother and so she cannot be said to have deprived herself of this asset for the purposes of care. If the value of the property falls below the IHT limit that would be the best way to deal with it, as there will be no tax consequences for anyone.

I think it might be better to create an interest in possession trust for mum covering the half a house she does not already own. This sounds complex but in every day language it just means giving mum the right to treat dad's half of the house as her own for the rest of her life, then at the death it will transfer legally to the children named in dad's will.

Unfortunately the right to house your widowed mum in a house that the children already owned, free of Capital Gains Tax, disappeared many years ago

itcanbedone_2

You are all so kind thank you. It feels strange trying to be practical, and thinking of finances, when he is so poorly. He's on mid level pain relief at the moment, but life can be so cruel sometimes.

Nicki

John_Pierpoint wrote: »

I think it might be better to create an interest in possession trust for mum covering the half a house she does not already own. This sounds complex but in every day language it just means giving mum the right to treat dad's half of the house as her own for the rest of her life, then at the death it will transfer legally to the children named in dad's will.

Unfortunately the right to house your widowed mum in a house that the children already owned, free of Capital Gains Tax, disappeared many years ago

On of us has misunderstood the situation. It might be me, but shall I spell out what I think the situation is, so you can also double check it wasn't you

There are or will be two properties. At the moment both probably owned by both mum and dad and probably as joint tenants (though OP doesn't make that clear).

My suggestion is that the bigger more valuable property should have the joint tenancy severed and dad's share (which is likely to be the lions share) be left to the children in the will. OP has said that the estate is below the IHT threshold and there will be no CGT on this either.

The other smaller property is the one close to the children and mum will be living there when dad dies and jointly owning it. That's the property which can be used to meet her care needs if she has them in later life. Again there shouldn't be CGT or IHT implications to this, at least not if it is held on a joint tenancy during dad's life time and anything left from the proceeds less care fees comes to the children via mums will.

itcanbedone_2

Nicki wrote: »

On of us has misunderstood the situation. It might be me, but shall I spell out what I think the situation is, so you can also double check it wasn't you

There are or will be two properties. At the moment both probably owned by both mum and dad and probably as joint tenants (though OP doesn't make that clear).

My suggestion is that the bigger more valuable property should have the joint tenancy severed and dad's share (which is likely to be the lions share) be left to the children in the will. OP has said that the estate is below the IHT threshold and there will be no CGT on this either.

The other smaller property is the one close to the children and mum will be living there when dad dies and jointly owning it. That's the property which can be used to meet her care needs if she has them in later life. Again there shouldn't be CGT or IHT implications to this, at least not if it is held on a joint tenancy during dad's life time and anything left from the proceeds less care fees comes to the children via mums will.

Yes, that's right. The smaller house they are just buying at the moment, but its not clear yet whether this should be in joint names (?). It should be ready for them to move in, slowly and at their own pace, in about 6 weeks. I haven't checked whose name the bigger house is in....

cte1111

How much is their current house worth? Do you have any idea how much the compensation is likely to be? This would help in terms on knowing how to deal with their assets wisely.

itcanbedone_2

cte1111 wrote: »

How much is their current house worth? Do you have any idea how much the compensation is likely to be? This would help in terms on knowing how to deal with their assets wisely.

their current house is worth about £160,000. He has mesothelioma (lung cancer caused by asbestos), we have instructed a solicitor to deal with the claim, but I have no idea how much this would be if successful, and filled in the forms for industrial benefits. The new property is £90,000. X