Transfer of Equity?

Toddy_Senior

Hi,
Having recently retired, my wife and I need to think about how we can leave assets to our only son, in the event of having to go into a care home later in life.

I've heard about Transfer of Equity but am not sure if this would be of benefit. If we included our son as a one-third owner of our house via a transfer of equity and I then had to go into a care home, would (a) my wife be allowed to carry on living in our house and (b) would the greedy grasping government (of either political party!) be limited to taking a smaller share of the equity from our house, for care home fees.

I understand that care home fees will be capped at £75,000 per person but, as our home is worth only £150,000, what would this leave for our son? Would transfer of equity help us in this matter? Alternatively, any other ideas would be gratefully received....

margaretclare

This topic comes up, with a variety of headings but similar theme, time and time again and gets discussed here over and over again.

Your wife cannot be prevented from living in her own home.

No government, of any colour, is 'greedy and grasping' to the extent you describe and is not interested in 'taking your equity'.

Just as a matter of interest, my DH persuaded me to accompany him to visit a former colleague of his in a nursing-home near Virginia Water, Surrey. I've heard so many horror stories about nursing/care homes - what an eye-opener this was. The man we visited is hoping to be well enough to go home soon - he's very frail physically but pin-sharp mentally. He's paying for his care out of investments and says it's worth every penny. I couldn't agree more. Like a 5* hotel.

Nevertheless, it is still the case that only a minority of people end their days in full-time residential care.

BitterAndTwisted

AgeUK has an interesting and informative section on care-home funding and issues around Deprivation of Assets.

Quite honestly, if either one of you needed of full-time care and knew and understood about the standards of some purely state-funded homes, my guess is that you'd happy to pay the top-ups necessary. Most children would be happy to "forfeit" their inheritance too if it meant they wouldn't have to give up their jobs, homes and freedom to do it themselves.

troubleinparadise

Dear Toddy senior,

Whilst it is generous of you to wish to leave your assets to your son, I wonder what your son's view is?

I took the view with my parents that anything they had accrued over the years was to look after them in their twilight years as comfortably as possible. They could afford to shop for the food they chose and have the heating on without needing to be too careful, and not to worry about meeting their bills.

This did come to fruition in the care situation - when my mother was declining and we knew she would need residential care, the peace of mind knowing she could afford the care she would choose for herself in a good home was such a help in stressful and sad times.

Not everyone needs residential care in their old age and if family are involved enough and the situation allows, care can be given in the home thus avoiding residential care. The average stay in residential care is two years.

One step you can take to protect your home is to ensure that you and your wife own it as tenants in common rather than joint tenants.

Making your son a joint owner of a third of your house leaves you in a vulnerable situation as a part share of your house would be included in any financial assessment of his affairs should he have financial difficulties or a divorce, plus other tax and financial implications.

securityguy

BitterAndTwisted wrote: »

Quite honestly, if either one of you needed of full-time care and knew and understood about the standards of some purely state-funded homes, my guess is that you'd happy to pay the top-ups necessary. Most children would be happy to "forfeit" their inheritance too if it meant they wouldn't have to give up their jobs, homes and freedom to do it themselves.

This. Every word.

I know of an elderly woman with dementia who's living in minimum cost LA funded residential care while she has six figures tied up in a complex scheme surrounding her house. Her sons want to sell the house to improve her standard of living, but can't, and don't have the money to improve matters from their income (one is unemployed, the other works for a fairly low wage).

In essence, she signed an EPoA which excluded sale or rental of her house, because she saw her sister's house sold to fund extremely pleasant long-term care and was convinced that with the right legal structure she could "save" the money. She was wrong. Her cash assets are now gone, so all that's left is an empty house.

Her sons are also incurring costs they can't afford in maintaining an empty house they can't rent out, and are being threatened with legal action as attorneys because the house is decaying to the point that the other half of the semi is affected. There might come a point where the sons have no option but to walk away, renounce the PoA and leave her to it, in order to protect their own finances.

It's an utter shambles, and entirely the elderly woman's own fault for prioritising "inheritance" over "living decently". She is now mentally incapable of fixing the situation, even it is can be fixed, and everyone is in a bad situation. It's possible that the Court of Protection could be invoked to fix the situation, but the sons are distraught.

RAS

Toddy_Senior wrote: »

Hi,
Having recently retired, my wife and I need to think about how we can leave assets to our only son, in the event of having to go into a care home later in life.

I've heard about Transfer of Equity but am not sure if this would be of benefit. If we included our son as a one-third owner of our house via a transfer of equity and I then had to go into a care home, would (a) my wife be allowed to carry on living in our house and (b) would the greedy grasping government (of either political party!) be limited to taking a smaller share of the equity from our house, for care home fees.

I understand that care home fees will be capped at £75,000 per person but, as our home is worth only £150,000, what would this leave for our son? Would transfer of equity help us in this matter? Alternatively, any other ideas would be gratefully received....

There are also possible complications regarding your son's ownership of one third of your property.

1. If he were to divorce his ex-partner would be entitled to a portion of the value of the house.

2. If he entered any sort of insolvency agrement, the Official Reciever would expect him to make available the capital tied up in the house to fund his debts.

peachyprice

Have you asked your son whether he would rather have an inheritance and see you suffer in a council run care home or to have very little inheritance and see you live out your days in comfort?

I know what I would want for my parents.

springdreams

It is also worth bearing in mind that the cap does not actually cover all the care home costs - there will be other expenses that will need to be paid over and about the cap.

http://www.telegraph.co.uk/finance/personalfinance/insurance/longtermcare/10162618/The-cap-on-long-term-care-costs-myths-and-reality.html

pollypenny

There is no 'greedy, grasping government': only other tax payers like us.

What you want is for us to pay for your son to inherit. No thanks. I'll happily pay for someone in need, otherwise I'll pay for myself.

tea_lover

If you don't pay any fees (if you get to the point where there are any to pay) then who do you think should?

StuC75

Prepaid ticket to dignitas? no further burden upon Sons Inheritance or the rest of the tax paying public.