Retirement Income from equity release

Needmoremoney_2

My widowed mother aged 75 was receiving a monthly allowance~£1000 from her brother for the last 10 years to supplement her state pension. These payments stopped last month when her brother died and there was no provision for my mother in his will. She wants to release money from her house (~£375k value with no mortgage) ideally £800pm for the next 15 years to provide an income. She lives alone. We have explored and discounted downsizing and also equity release through a lifetime mortgage. Myself and my brother are willing to pay £400 each per month to my mother, in return for a share of the house (which we would have got anyway eventually!), until she passes away or needs to go into a care home. We can’t afford a lump sum payment. What is the best way of arranging this for practical and tax purposes? Presumably if we get added to the deeds then our share of the property will be liable for capital gains tax as we don’t live at the property. I read that the property could be put into trust and the £800 per month payment could be a loan to the trust – this sounds complex – how does it work? I’d be grateful for any advice / thoughts on the best way to do this!

Mojisola

Needmoremoney wrote: »

My widowed mother aged 75 was receiving a monthly allowance~£1000 from her brother for the last 10 years to supplement her state pension. These payments stopped last month when her brother died and there was no provision for my mother in his will.

Has she taken legal advice on this? As she was being financially supported by her brother, she may have a claim on his estate.

Myself and my brother are willing to pay £400 each per month to my mother, in return for a share of the house (which we would have got anyway eventually!), until she passes away or needs to go into a care home. We can’t afford a lump sum payment. What is the best way of arranging this for practical and tax purposes?

If you decide to go down this route, just make a simple loan agreement. If the property has to be sold to pay for a care home, the debt will be repaid to you two.