Investing in dad's house

justlaugh2

I will shortly be moving into my dad's house, it is in a terrible state of repair and I will be investing around 30k into bringing it up to date and building wheelchair friendly extension for him. (He suffered a stroke and is bed bound mostly as he cannot and doesn't want to go upstairs)

He has a very old will that leaves an equal share of his estate to myself and 2 brothers. His house is currently worth around 450k but renovations I will be making will increase this to around 490k. He gets a small work pension, DLA and state pension, he doesn't have much by way of savings. He is happy to change this to leave me a greater share ( I have been caring for him for last 15 years)

What would be fair? I don't wish to leave my brothers out and they should receive fair share.

What would happen if he needed to go into care/nursing home? I cannot envision this happening as he would rather die than go into one and I would do everything in my power to stop this happening. But if the decision was out of my hands, where would I stand in regards to my investment in his house? If the local council decide his house should be sold to pay for care, can I have my 30k back?

Sorry it's lots of questions but I cannot find any situation like this in the forums
Thank you in advance for any advice you can offer.
Rebecca

harrys_dad

The easiest way is to "lend" the amount necessary to repair the house and then make sure this is set up so it is repaid on his death, before the estate is sorted out, or on the sale of the house if that happens (for example if he needs to go into care). You will need to discuss this with your siblings, and It is also complicated by the fact that his assets are about the IHT threshold. Not sure what effect you living in the house will have on whether or not it needs to be sold if care fees become payable. Some specialist legal advice may be needed.

On a separate note, have you spoken to Social services regarding any grants and assistance that may be available for adaptations?

Mardle

Talk to a solicitor about setting up the 'loan' as a charge on the house. That way your 30k would be repaid when the house is sold.

BigAunty

justlaugh2 wrote: »

What would happen if he needed to go into care/nursing home? I cannot envision this happening as he would rather die than go into one and I would do everything in my power to stop this happening. But if the decision was out of my hands, where would I stand in regards to my investment in his house? If the local council decide his house should be sold to pay for care, can I have my 30k back?

The Age UK website has excellent information about homeownership, care home fees and deprivation of asset issues that will give you a good idea of his rights and obligations. Mardle's idea to formalise it as a loan sounds good - verbal agreements are a waste of time, you need to cover your back and have a good audit trail, also it could stop family disputes over loan/gift issues, for example.

Have a look into whether his benefits may qualify him for a free boiler, insulation and similar energy saving improvements, if the local council offer any schemes to bring up personal properties to a better a standard for those on benefits/low incomes.

Ask on the benefits forum about what a social services assessment consists of and if this may result in the adaptions being offered for free or at discounted cost.

Mojisola

justlaugh2 wrote: »

I will shortly be moving into my dad's house, it is in a terrible state of repair and I will be investing around 30k into bringing it up to date and building wheelchair friendly extension for him. (He suffered a stroke and is bed bound mostly as he cannot and doesn't want to go upstairs)

He has a very old will that leaves an equal share of his estate to myself and 2 brothers. His house is currently worth around 450k but renovations I will be making will increase this to around 490k. He gets a small work pension, DLA and state pension, he doesn't have much by way of savings.

Is making expensive changes really the best solution? Downsizing to a suitable property might be a better option and it would release some capital.

specialboy

Where will you live when Dad dies and your brother wants his share of the capital?

BitterAndTwisted

One way of protecting the money you invest in his house if the property is not mortgaged would be to transfer ownership to "tenants-in-common" giving you a percentage of the total value. This could be 1/99% or 50/50% or anything in between. Whatever you all think is fair.

Your share would then be out of reach should your father require a place in a care-home. It's easy to say that he would never consent to it, or that you would never allow such a thing to happen but you've devoted a very long time to his care already. But that would not prevent the house you live in with him needing to be sold. What would your arrangements be then, would you have enough savings to secure alternative accommodation in such circumstances?

You could continue to live and look after your father for another 20 years while your siblings get on with their lives, pay off their mortgages and secure their long-term futures, all while your own current and future earning-potential is severely compromised.

I would advise you to start thinking the unthinkable and work from there.

justlaugh2

Thank you all for your replies, it looks like I have few options to consider.
I currently live in private rented accommodation which is now up for sale. The landlord is a friend and has offered me a percentage of the sale profits. This money would not be enough to secure a mortgage for myself and would easily fritter away on new rented accommodation.

He would reduce the amount he has to pay towards his daily carers.

I thought it would be better to increase the size/value of my dad's house which one day would be ours anyway.
[/LIST]He would enjoy the extra company but retain his privacy at the same time.
One of my brothers has been living with me for the last 8 years so would also need to move back into my dad's with myself and daughter. My dad's house has 3 empty bedrooms, he currently has a bed in the living room. Which is why I'd like to build an extension as a bedroom for him (he smokes a lot and it wouldn't be fair for daughter to have to walk through the thick smoke every time she needed to use the bathroom or kitchen)
I will look into grants to help towards the costs of renovations that are for his benefit. He has not been able to have a bath/shower for years, he makes do with a flannel and a bowl of soapy water. So a wet room would be nice.

xylophone

It is also complicated by the fact that his assets are about the IHT threshold.

Possibly not - if Dad is a widower the spouse allowance may be available.

http://www.hmrc.gov.uk/inheritancetax/intro/transfer-threshold.htm

Perhaps the OP and her brother could buy a percentage of Dad's house and they would own the home as tenants in common - Dad could use the money raised to extend the house etc.

Dad could then will his share of the property to his three children in equal proportions.

This arrangement might well protect the home from having to be sold if Dad were to go into care. http://www.thisismoney.co.uk/money/news/article-1594984/Tenants-common.html

However, the third sibling might object to such an arrangement because his inheritance would be tied up in the house.

An alternative would be for the OP to lend father the money with interest rolled up and paid on sale of the property.

The OP would be best advised to have a solicitor draw up a document evidencing the above arrangement.

justlaugh2

Thank you xylophone, some very useful info. My dad is a single dad, so IHT would apply.
I will get financial advice regarding what's best but I just needed a heads up on available options.

Mojisola

justlaugh2 wrote: »

Thank you xylophone, some very useful info. My dad is a single dad, so IHT would apply.

I will get financial advice regarding what's best but I just needed a heads up on available options.

As inheritance tax will be paid from the estate, will the house have to be sold in order to release the money?