Family Dilema over Parents future welfare

accoustic22

Hi, We have a really involved situation and would be very grateful of some advice or pointers if anyone can help. I will keep short as possible - my parents both retired and since then my mum fell ill and dad has mild dementia. So they sold their house and moved in with my brother with plans to extend my brothers house to accomodate them using their house sale money, over £100k. It seemed an ideal solution at the time. Since then my mum fell seriously ill and dad badly deteriorated so circumstances have changed massively but the plans for the house extension has not. To add to that, all the house sale money will be gone on the extension and it was put to us that when the time came and both parents were no longer alive, the house would be sold and the funds distributed from the sale accordingly. However, with 2 teenagers/young adults, he and his wife obviously have a responsibility to home them and for us to be mindful of that. This we completely agreed with and totally understood. However, my brother has now informed us that he has 15years left on his mortgage and insinuated there is no equity in his property - presumably from re-mortgaging a few times so I guess he is suggesting that it will be 15years until he is in a position to sell - my parents are highly unlikely to be around in 15 years. Even so, the mortgage is in his name and my parents have no entitlement on the deeds whatsoever, they are merely paying for the extension, so what's to stop him re-mortgaging again 10years down the line and we would never know, he could keep on re-mortgaing. We are concerned that the money will be tied up in the extension (that they really dont need all of it now) and there will be no money for necessities further down the line, for example a remote control type bed to sit them up and so on. There is no money put aside for their needs at a later date, and we are sure they are going to need some. There was also a suggestion that if they had say over £20k savings, like from the sale of the house then they wouldn't get certain care benefits. We're not really sure where to start with all of this and would appreciate any info anyone can give us. Thanks you very much for taking the time to read this and hopefully will get some direction from someone.

London_Town

Oh dear, this does sound unfortunate for you. How many siblings are involved? Is it just the two of you? If so, you clearly need to have a frank and open discussion about this whole situation with your brother.

The money from the sale of your parents home can't be allowed to "disappear" into your brother's housing equity. As you quite rightly state, they will probably need some money for various living aids as long as they remain there.

Longer term, if they need residential care, the council will want to know where the equity from their house has gone. Also, it's not impossible that it could be seen as deprivation of assets, whereby families take action to avoid future care costs. The other long term issue is your rightful inheritance. In theory, when you eventually lose your parents, you should be entitled to an equal share of their remaining estate. This can't be tied up in your brothers house, with a never ending future promise to pay you off one day.

I appreciate that these last two points may be uncomfortable to think about, but that is the advantage of asking strangers on a forum like MSE. Hopefully we can help you to consider all angles of a potential problem.

Bogalot

The first thing that stands out to me is, with the health of your parents, is there a capacity issue? Do they understand the implications of giving away their money?

The suggestion regarding deprivation of capital and future benefit claims/ care funding is a valid one, it's quite possible they would be assessed as if they still had the funds.

I would strongly suggest that you consult a solicitor. The implications of this are far too important to rely on advice from an internet forum.

G_M

So:

1) your parents have 'gifted' £x00,000 from the sale of their property to your brother.
2) That gift wil be subject to Ineritance Tax if they die within 7 years (not sure how the gift is split - I guess they each gifted half?)
3) you received nothing
4) brother is putting his gift into extending his home
5) brother may, or may not sell in 5, 10, 15, 20, 30 years
6) brother may, or may not, then gift you ... what? Half the amount parents originally gifted him? Half the increase in property value the extension provided?
7) if Care costs are needed in the future, the Local Authority is likely to consider the gift "Deprivation of Assets" meaning your parents will not qualify for LA support.

This is all very unplanned, un-thought-through and un-documented.

How do get on with your brother? Are one/more of your parents still capable of rational decision-making?
If yes, you all need to sit down, agree who is getting what, as a gift/loan etc, for how long, and what will hapoen in the future given whatever scenario develops. Then you need o documet the agreement appropriately (eg a Deed, a Charge on his property, a new Will, whatever)

If you do NOT get on well and/or parents are now not mentally competant..... you are ****ed!

missbiggles1

London_Town wrote: »

Oh dear, this does sound unfortunate for you. How many siblings are involved? Is it just the two of you? If so, you clearly need to have a frank and open discussion about this whole situation with your brother.

The money from the sale of your parents home can't be allowed to "disappear" into your brother's housing equity. As you quite rightly state, they will probably need some money for various living aids as long as they remain there.

Longer term, if they need residential care, the council will want to know where the equity from their house has gone. Also, it's not impossible that it could be seen as deprivation of assets, whereby families take action to avoid future care costs. The other long term issue is your rightful inheritance. In theory, when you eventually lose your parents, you should be entitled to an equal share of their remaining estate. This can't be tied up in your brothers house, with a never ending future promise to pay you off one day.

I appreciate that these last two points may be uncomfortable to think about, but that is the advantage of asking strangers on a forum like MSE. Hopefully we can help you to consider all angles of a potential problem.

It sounds rather more unfortunate for the parents!

accoustic22

Hi London Town and thank you for the very quick response. There are 3 siblings involved, my sister will just go along with anything for an easy life and usually wont speak up much.
OK so even 5 or 10 years down the line the council could refuse care costs because the sale money was invested in my brothers extension (if they later needed care)?
This is exactly the kind of thing we weren't aware of, do you think there could be other areas we haven't thought of that could cause a problem later on? Our main concern is that if my parents need something then we can get it and make what limited time they have left as comfortable as possible but my brother has full control of their finances and money,we haven't seen any of their bank statements or anything like that, not sure if we should look into this side of it a little more?

missbiggles1

accoustic22 wrote: »

Hi London Town and thank you for the very quick response. There are 3 siblings involved, my sister will just go along with anything for an easy life and usually wont speak up much.
OK so even 5 or 10 years down the line the council could refuse care costs because the sale money was invested in my brothers extension (if they later needed care)?
This is exactly the kind of thing we weren't aware of, do you think there could be other areas we haven't thought of that could cause a problem later on? Our main concern is that if my parents need something then we can get it and make what limited time they have left as comfortable as possible but my brother has full control of their finances and money,we haven't seen any of their bank statements or anything like that, not sure if we should look into this side of it a little more?

They didn't "invest" it in his property - from what you've said they just gave him the money.

Sambella

accoustic22 wrote: »

Hi London Town and thank you for the very quick response. There are 3 siblings involved, my sister will just go along with anything for an easy life and usually wont speak up much.
OK so even 5 or 10 years down the line the council could refuse care costs because the sale money was invested in my brothers extension (if they later needed care)?
This is exactly the kind of thing we weren't aware of, do you think there could be other areas we haven't thought of that could cause a problem later on? Our main concern is that if my parents need something then we can get it and make what limited time they have left as comfortable as possible but my brother has full control of their finances and money,we haven't seen any of their bank statements or anything like that, not sure if we should look into this side of it a little more?

You need to be aware that yourself and your sister could well end up with NO inheritance and brother gets the lot. Brother dear seems very persuasive.

Please be careful. Protect your parents interests and your own.

Will this extension really cost £100k? Does he plan to charge your parents rent, claim housing benefit?

AylesburyDuck

The way i read it the extension hasnt been built yet? Can you clarify this?
With your parents failing health the situation needs to be totally re thought as the extension no longer seems a viable solution, and yes would just be totally to his benefit and not the familys, in fact it will end up being more hassle to the family than any short lived benefit to your parents.

missbiggles1

AylesburyDuck wrote: »

The way i read it the extension hasnt been built yet? Can you clarify this?
With your parents failing health the situation needs to be totally re thought as the extension no longer seems a viable solution, and yes would just be totally to his benefit and not the familys, in fact it will end up being more hassle to the family than any short lived benefit to your parents.

That's the way I read it as well.

I wonder where the money is at present.

Pa_Ja

I think your brother either knowingly or unknowingly is taking the !!!!.
If your parents were to say that they are splitting the money 3 ways just now, ie, you, your brother and sister, £33k each or whatever the figure is... Would the brother be so willing then to take them in?
I highly doubt it.