MIL options for retirement

Justwe03

Hi there,

Just after a little budge in the right direction, I understand I cant get legal advice here and will take MIL to and IFA when she can afford it.

Basic story is:

MIL lives in a three bed bungalow last valued at £155,000 in 2010 (no mortgage)
MIL lives on state pension (receives nothing else)
MIL is 65

She is very unhappy, really struggling financially and never got back on her feet after her husband left when the children were small. She can't manage the bills and her debts on her state pension alone. Due to health reasons (apparently i've not known her very long) she can't work now.

Her youngest son (my bf) has been living with her since coming back from Dubai 3 years ago after an accident. But is pretty much back on his feet now (health wise)

MIL has spoken in the past of selling the bungalow but didn't want too because son was recovering.

Now there is the option for her to sell the bungalow and do whatever she wants* with the capital of the house sale.

And that's where it's all falling down really.

Neither her nor any of her children have any idea how to manage money, entitlements, dep of capital etc... So i've said I'll look into a bit and they are going to have a family meeting in a few weeks time.

I am trying to wrap my head round what her options are with the capital of the house sale for future planning and IHT. Her only asset is the house.

She would like to move into a sheltered housing scheme in the local area with the sale. Looking at properties around £90-95k

If she downsized like this, leaving I guess about £40k in her account. If she then spends this, gifts some to the children etc... will it mess up her state pension?

Can she gift her 3 children an amount and it not be part of probate providing she lives 5 more years?

With her estate being so small would there be any comeback for her care costs in the future (if applicable)

Also, She has no will :eek: so I am trying to sort that out too as much as I can. She is very much a recluse and doesn't go out or participate in any groups or things so she is a little worried about going to see someone about her finances/will.

Sorry for the essay!

xylophone

Is she entitled to Pension Credit? https://www.gov.uk/pension-credit/overview

Does she have care needs? https://www.gov.uk/attendance-allowance/overview

It would seem that her estate is well below the IHT threshold at the moment.

I would have thought that if her income is modest but a little too high for pension credit, then she will need to use any capital left over from the sale of the bungalow to supplement her pension - there would seem little room for gifts to children over and above modest amounts.

If she should need care in the future, the rules are changing. http://www.ageuk.org.uk/home-and-care/care-homes/paying-for-permanent-residential-care/

kidmugsy

There's not the remotest chance that IHT will affect her, so that's one simplification.

bouicca21

Is this a private sheltered housing scheme? The management costs tend to be very high - bit tough on a state pension.

Have you been through her budget?

Woukd she consider a lodger?

sleepless_saver

Her state pension is not affected by any money she gives away.
But it sounds like she cannot really afford to be gifting money to anyone - and if she subsequently applies for income related benefits she may be counted as if she still has it.

Before she does anything else, she could check her current entitlement to pension credit. It's just her details that are needed, not her son's. If she is entitled, it will also passport her to other benefits. Nobody needs to come to the house for this and it would release some of the financial pressure. Is her son contributing to the household running costs while living there?

bouicca21 is right about the ongoing costs of private sheltered housing, they will take a big slice out of a state pension. She (or you) could phone them and ask how much they charge (bearing in mind that it will go up every year).

atush

I agree that sheltered housing if private may not be for her. And that she canot afford to give any of the excess from the home sale to her children- if she owns her sheltered housing unit they can inherit the money from that when she is gone?

It sounds as if she has not been claiming pension credit. Get her to age concern, or CAB pronto- dont wait for a family meeting.

And they dont need a family meeting if children will be pressuring her for money.

And if your BF is not good with money, keep him away from yours until you have educated him and you are married.

Justwe03

Thanks for all the replies, I will try and clear up a few things

Thats good about the IHT thank you for the information. I will be seeing BF and MIL on Thursday so mention about her income and see if she will let me have a proper look at it with her. BF and I are hoping to get her into Age Concern on Friday to meet them and take her to the cafe for lunch. I popped in and got some leaflets of the social things they do and said we'd take her down to say Hello.

There is no pressure from the kids for money from Mum, this was something she wanted to do herself. I meant more the had no idea how to manage money further than it comes in, it pays bills, it goes out until the next pay packet rather than there being lots of debt etc... Their father left them with nothing but the house which she has downsized over time but he'd always been a control freak and never let MIL have any money let alone see where it went how it worked etc...

(though, why this wasn't all sorted after he left I don't know)

BF does contribute to the house, but has been on a low income mainly freelance design work selling his stored belongings whilst he was recovering. (assumed he wasn't entitled to state benefits when he came home as he'd been working in Dubai for three years. << This kind of no financial sense) The sister has separated from her hubby but they've been living together in the house for about 5 years now he has new partners frequently but will not cut financial ties even though he doesn't contribute.

Everyone just wants MIL to be happy and to not stress about whether she can afford a packet of bananas!

No worries about my own income bf abusing it. I don't have much to share and my children are my priority.

Will look more into the sheltered housing costs. The admin charges in the area are about £680 - £750pa But that includes all bills and maintenance.

Absolutely no chance of a lodger and she's so unhappy in the bungalow she got rather upset when we were chatting which was heartbreaking. A few of the neighbours can be quite horrid.

Justwe03

Just to add as for some reason I can't edit:

Other things considered:

Releasing equity from the home to enable her to have a little more freedom to enjoy her retirement and go out and participate in things without having to move if she decided to stay.

Selling the house keeping the capital and renting one of the over 55's/60's managed apartments from the local housing association (there is surplus housing stock here so quite often the are put on the market for anyone to rent.)

sleepless_saver

The second option sounds good if the accommodation will continue to be suitable for her in the long term. Maybe she should have a look at the pdf on this Firststopadvice site which is useful in thinking about future options and needs (at 65 she is hardly old but still worth thinking ahead).

Incidentally, is she still married to the bf's father who left? If they are still married and she were to die without making a will, he would be entitled to the lot as estate value is less than 250k (assuming this is England).

atush

If she hates iving in her bungalow then sell it and move into a sheltered housing unit if you are sure she can afford it. Tell her to keep her money to ive on and you will all enjoy inheriting her sheltered flat when she eventually goes? And if she has more than she needs, just save it and dole it put at christmas and birthdays.

But I am sure she is earning less than the PC threshold so get her down to the CAb prontoa you plan. Could make all t he difference to her if she gets a little bump in income.

margaretclare

As you say that MIL is in debt, clueless about money management etc, then the very last thing that should be talked about is her giving any money away - to anyone.

If she doesn't like where she lives then sell it and move. As anyone would do whatever their age if they didn't like where they live. Then get out of debt, and start learning to manage her money more sensibly.

As others have said, if SRP is her only income it's quite likely she'll be entitled to some top-up from pension credit.