My House and My Will

Johnny8718

Dear All.

Maybe not the correct area of the site to post, I apologise if this is the case.

My wife and I are in our late 70's and are concerned what the future holds. We are homeowners and have one son who is 43. He is married, with children and has a good job. He is a homeowner in his own right. Our intentions have always been to ensure that he inherits the house when we pass away but we have become increasingly concerned as to what may happen if we need to be cared for in later life. My brother is widowed and is now in a care home, the family almost forced to sell his home to pay for his care.

We wrote a will in 1998 which has just been reviewed this week and found to be in 'good order'. The solicitor (18 years ago) discussed our concerns and suggested that we write a clause in the event that one of us passed away and the other needed to go into a home in the event of dementia or the likes. In that event, the will now states that half of the house will be automatically signed over to our son. The other half will be kept to pay for care fees. This is where our concerns lie.

What would happen? Should the local authority require payment for care, we appreciate that the house would have to be sold. However, how much say would our son have in the sale of the house? Could he hold out for the best price? Could the local authority take over and sell the house at a lower price for a quick sale? Could the local authority demand that he sells it immediately?

Although this option seemed favourable to us, we can't help but feel that those who have a stake in the money to pay for our care may sell this house at a disadvantage to our son and in the event that it is sold at a much lower price than the market value, he would be left with nothing after the care fees are settled.

We have heard many stories of couples signing the house over to their children and then waiting several years until the house is finally and legally no longer theirs. Of course we would continue to live in it and pay our son some form of rent. The solicitor this week however frowned upon this and said that the local authority would have 'ways round it' anyway.

This is a worrying time as we have worked very hard for what we have. Your help would be appreciated.

Thanks, John.

MrJB

Really it's a time sensitive subject. If you gifted the house to your son now and in a couple of months time one of you needed to go into a home, then almost certainly you'd end up being seen as deliberate deprivation of your assets to avoid care fees. There local authority can then claw back some of these care fees. The longer the period of time between gifting the house and the need for care, the less likely the investigation or claw back.

xylophone

http://www.theguardian.com/money/2014/aug/28/tenancy-common-care-home-fee-solution

http://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS39_Paying_for_care_in_a_care_home_if_you_have_a_partner_fcs.pdf?dtrk=true

may be of interest.

cte1111

Age UK have a good fact sheet on this subject:
http://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS38_Treatment_of_property_in_the_means-test_for_permanent_care_home_provision_fcs.pdf?epslanguage=en-GB?dtrk=true

When my Gran went into residential care, I dealt with the financial assessments and ultimately the sale of her flat. I had power of attorney for her, which I would recommend looking into, for your son to be able to look after your affairs, if you were ever unable to do so yourself.

I initially paid for my Gran's care from her savings, until they dropped below £6,000 (arguably it should be much higher and different local authorities seem to treat the legislation on this matter to mean different dates). When her savings had effectively run out, then the council paid for her care, but I had to show that I was taking steps to sell her flat, e.g. Send them details from the estate agent. It took some time to sell, but there was no pressure put on me by the council to sell at a lower price. I actually agreed a sale on the flat on the day of my Gran's funeral, at that point we owed about £5,000 to the council.

Some of the care costs were met by benefits and other income, e.g. A small private pension and state pension. Bear in mind that most people will never need residential care and if they do a fair chunk of the cost will likely be paid for out of income and benefits, as in this case.

Mojisola

Johnny8718 wrote: »

The solicitor (18 years ago) discussed our concerns and suggested that we write a clause in the event that one of us passed away and the other needed to go into a home in the event of dementia or the likes. In that event, the will now states that half of the house will be automatically signed over to our son. The other half will be kept to pay for care fees. This is where our concerns lie.

You need to make sure that the ownership of your house has been changed to 'tenants in common' for this to happen. The ownership will change on the death of the first spouse, not if/when the survivor needs care.

What would happen? Should the local authority require payment for care, we appreciate that the house would have to be sold. However, how much say would our son have in the sale of the house? Could he hold out for the best price? Could the local authority take over and sell the house at a lower price for a quick sale? Could the local authority demand that he sells it immediately?

As the surviving spouse would be self-funding, no-one will 'take over the house'. Paying the care home bill will be between the resident and the care home.

If there isn't enough cash to keep paying the bills until the house is sold, the local authority can set up a deferred payment scheme. They will put a charge on the house and pay towards the bills (up to the level they set). That money will be recouped when the house is sold.

Brightspark87

Hi

I am slightly biased being one but I think you may need an IFA to get involved at some point. Now, sounds like you have a tenants in common rather than joint tenancy but its a little vague. This is normal to do when worried about care home fees.

However - you aren't in that position yet so no need to worry at this stage law changes all the time. The Care Fees Bill was meant to come into force this year but now delayed until 2020 by which time the rules around Care could be dramatically different.

Gifting large amounts at this stage could mean that you are deliberately deprecating assets and would mean it is pointless in the future as you will be treated as if you still owned those assets.

antrobus

Johnny8718 wrote: »

...Although this option seemed favourable to us, we can't help but feel that those who have a stake in the money to pay for our care may sell this house at a disadvantage to our son and in the event that it is sold at a much lower price than the market value, he would be left with nothing after the care fees are settled. ....

No, because the care fees can only be charged against the survivor's 50% share.

Johnny8718 wrote: »

..We have heard many stories of couples signing the house over to their children and then waiting several years until the house is finally and legally no longer theirs. Of course we would continue to live in it and pay our son some form of rent. The solicitor this week however frowned upon this and said that the local authority would have 'ways round it' anyway.

Signing over the whole house would be something very different. Your solictor is right to frown on it.

Johnny8718

Thank you to all that have replied. This makes much more sense now and seems to be the most appropriate option.

Thanks once again, John.

ognum

Johnny8718 wrote: »

Dear All.

Maybe not the correct area of the site to post, I apologise if this is the case.

My wife and I are in our late 70's and are concerned what the future holds. We are homeowners and have one son who is 43. He is married, with children and has a good job. He is a homeowner in his own right. Our intentions have always been to ensure that he inherits the house when we pass away but we have become increasingly concerned as to what may happen if we need to be cared for in later life. My brother is widowed and is now in a care home, the family almost forced to sell his home to pay for his care.

We wrote a will in 1998 which has just been reviewed this week and found to be in 'good order'. The solicitor (18 years ago) discussed our concerns and suggested that we write a clause in the event that one of us passed away and the other needed to go into a home in the event of dementia or the likes. In that event, the will now states that half of the house will be automatically signed over to our son. The other half will be kept to pay for care fees. This is where our concerns lie.

What would happen? Should the local authority require payment for care, we appreciate that the house would have to be sold. However, how much say would our son have in the sale of the house? Could he hold out for the best price? Could the local authority take over and sell the house at a lower price for a quick sale? Could the local authority demand that he sells it immediately?

Although this option seemed favourable to us, we can't help but feel that those who have a stake in the money to pay for our care may sell this house at a disadvantage to our son and in the event that it is sold at a much lower price than the market value, he would be left with nothing after the care fees are settled.

We have heard many stories of couples signing the house over to their children and then waiting several years until the house is finally and legally no longer theirs. Of course we would continue to live in it and pay our son some form of rent. The solicitor this week however frowned upon this and said that the local authority would have 'ways round it' anyway.

This is a worrying time as we have worked very hard for what we have. Your help would be appreciated.

Thanks, John.

I am going to say something you may not like but I will try to say it in the nicest possible way!

Why should the tax payer fund your possible care when you have assets to support yourself just so your son who is fit and well and has a good job and a house can benefit?

If you sign your house to your son unless you pay market rent to him as your LL it will be deemed a deprivation of assets and the value will be used anyway. If you pay him rent then he will have to declare this to HMRC and pay tax on it!

Your son could well end up with a large capital gains bill for your house if he wins it and sells at a later date as it won't be his home. If you sign you house to your son, even part of it and he needs to move house it will be considered he is buying a second home and he will have a very large stamp duty bill.

Think about all these things.

I have a large property portfolio but would never consider asking the state to fund any future are I need. If you can afford it then pay!

nkkingston

I'm with Ognum on this. If you have the assets to pay for care, and your son has no pressing need of them, then why shouldn't they be used to pay for it? It lifts a little of the burden from those without assets. It's also worth considering what quality of care you want. Selling our gran's house allowed us to put her in a nicer home with more staff and better facilities than otherwise.

Johnny8718

ognum wrote: »

I am going to say something you may not like but I will try to say it in the nicest possible way!

Why should the tax payer fund your possible care when you have assets to support yourself just so your son who is fit and well and has a good job and a house can benefit?

If you sign your house to your son unless you pay market rent to him as your LL it will be deemed a deprivation of assets and the value will be used anyway. If you pay him rent then he will have to declare this to HMRC and pay tax on it!

Your son could well end up with a large capital gains bill for your house if he wins it and sells at a later date as it won't be his home. If you sign you house to your son, even part of it and he needs to move house it will be considered he is buying a second home and he will have a very large stamp duty bill.

Think about all these things.

I have a large property portfolio but would never consider asking the state to fund any future are I need. If you can afford it then pay!

Thank you for your thoughts. I am not at all saying that I should do this. I agree with your sentiments regarding the tax payer as I have been one for the last 60 years.

I am just concerned that the local authority could take advantage of the situation and could claim more than they are entitled to. By the time that one of us is deceased and possibly the other unable to make sound financial decisions, I just need to be sure that I did the right thing by my family.

I am not trying to evade my obligations nor am I trying to defraud the government pocket. I just needed clear advice as I simply do not know what all of this means and I am taking the advice of one solicitor and am basing everything that I have ever worked for and its security - on his judgement and his ideas.

I thank you for your comments but am only trying to protect my families future. Aren't we all?

John.