Letting out home to avoid care home costs? 2 November 2015 at 1:40PM edited 2 November 2015 at 3:15PM in Over 50s MoneySaving 16 replies 8.1K views

MisterMuso

My parents' house in Scotland has become unoccupied since my father passed away and my mother moved into a care home earlier this year. My solicitor has advised me to let out the house in order to avoid the proceeds of the sale being reclaimed by the council, who are currently subsidising my mother's care home costs quite considerably. However I've heard that local councils have powers to recover such costs in arrears if the house is sold at some point after my mother passes away. So surely the advice to let out the property is just postponing the inevitable, if the council can recover costs anyway at a future date? I could still let out the property in the hope of making some profit through rental and through the sale in the future, but would I then have to set money aside from the sale in case the council come knocking? Frankly I'd rather save myself all the hassle and just sell the property now if the end result is going to be the same. Maybe this is the right thing to do anyway. Note that half the value of the property will still come to myself and my sister anyway, which the council can't touch, as per my father's will. It's my mother's share of the property which is in question here. I know the inheritance tax laws have changed recently, as there used to be a seven-year rule where the house could be gifted and after seven years would no longer be part of the estate, but I understand that law has been scrapped?

I really don't want to embark on anything dodgy or questionable financially, but I just want to know if letting out the house would be a waste of time in terms of protecting the eventual sale proceeds or not.

comeandgo

Does your solicitor mean that the money being taken as rent will go towards your mums costs rather than the council waiting until house sold?

MisterMuso

comeandgo wrote: »

Does your solicitor mean that the money being taken as rent will go towards your mums costs rather than the council waiting until house sold?

Possibly - however I don't think any proceeds from rental would be enough to cover the care home costs which run into hundreds of pounds per week.

I've spoken to my solicitor a number of times now but I'm still not clear as to why they are giving this advice. Just trying to get an idea on the follow-up questions to go back to them with.

pmlindyloo

This link might help as regards getting some advice.

http://www.careinfoscotland.scot/topics/care-homes/paying-care-home-fees/selling-your-home/

Have you got power of attorney for your mum? If not, would your mum be able to make decisions about the house herself?

Has a financial assessment been done? What was said about the house?

Is your mum receiving all the benefits that she is entitled to?

Would her income plus the rental income be enough to pay for the care home fees? Has she any savings?

You need to find out about the financial assessment first and then go from there.

Biggles

Unless half the rent from the house* would cover your mother's care home fees, I see little point, as I believe the Council would place a charge against it and require that the fees are paid out of it. Unless, of course, things are different in Scotland.


Possibly this is not the solicitor's specialist area?


*Only half would be due to go to your mother, as you now own the other half)

pmlindyloo

Biggles wrote: »

Unless half the rent from the house* would cover your mother's care home fees, I see little point, as I believe the Council would place a charge against it and require that the fees are paid out of it. Unless, of course, things are different in Scotland.


Possibly this is not the solicitor's specialist area?


*Only half would be due to go to your mother, as you now own the other half)

I don't think the OP meant that he owned half the house rather that he and his sister would inherit half the house presumably because his dad left his share of the house in trust.

But an interesting point - might be worth while checking whether the value of the house has been put into a Family trust meaning that the whole of it is inherited by OP and sister.

MisterMuso

All good points. I've emailed my solicitor some further questions.

For clarification, half the house was owned by my mum, and half by my dad.This means that my mum can't be forced into selling the house against the wishes of myself and my sister, who inherit my father's share of the house. While we are letting out the property, we can legitimately claim that we wish to make an income from that. My mother couldn't be forced into selling as you can't sell half a house. When she passes away though, and her half passes to myself and my sister just like my father's half, I'm worried that we may at that point be forced into selling to cover care home costs in backpayments.

If that's the law, then fair enough. I just want to be ready to act accordingly, whatever that involves.

MisterMuso

Well, I spoke to my solicitor again, and she said it all hinges on the premise that my mother can't sell half a house, because it was jointly bought by her and my father, six months before she went into the home. When my father passed away therefore, instead of becoming solely her property, the half belonging to my father is now mine and my sister's. My solicitor says she's never heard of the council forcing families to make back-payments in my circumstances, However, I've found a rather worrying report about "avoidance inspectors" recently employed by the council in Buckinghamshire who have been doing just that, in cases where parents have signed the property over to be owned by their children before they go into home. My father leaving half the property to myself may come under the same "deprivation of assets" label, I fear.

As I say, I'm not actively seeking ways to "avoid" what some say should come out of my mother's property share; I'm just trying to make sense of the law and of the advice I've been given to let the property out, and whether that would be just postponing the inevitable.

Newly_retired

Age UK are very good at advising on care home fees, so I would suggest you speak to them and see what they say. Or maybe a free half hour with another solicitor?

pollypenny

Why should the council not charge back for your mother's fees or, indeed, you rent the house.

Together with Attendance Allowance you might cover the the fees.

anmarj

pollypenny wrote: »

Why should the council not charge back for your mother's fees or, indeed, you rent the house.

Together with Attendance Allowance you might cover the the fees.

Because she reside in Scotland and they contribute towards the fees anyway, attendance allowance is not payable.