Wife's parents offering to pay off our mortgage.

Jeepers_Creepers

Hello.

We have around £45k left on our mortgage, and my wife's elderly parents are offering to help us pay it off.

Their situation is that they have around £70k in savings, own their own house outright, and are content with their private work & state pensions - they don't really need for anything.

Whilst we would obviously welcome this(!), we don't know anything about possible tax implications. There is also the situation that dad-in-law is starting to significantly suffer from dementia, and it may be that at some point he'll need professional care.

Our ultimate plans are for us to move in to a property which has an annexe, so that my wife's parents can effectively move in with us when they can no longer look after themselves, but we are hoping (for their sake as well as ours...) that this is still a few years off. D-i-l, however, may require residential care before then if he deteriorates significantly.

Is there any reason why they cannot help pay off our mortgage, and are there any longer-term implications for this?

Many thanks for any guidance.

Catswhiska

As long as any Nursing Home cost can be covered by his pensions. Otherwise it will be !!!8216;deprivation of assets!!!8217; if he gives some of his savings away

Browntoa

It's not an issue unless that money is required for car down the line.

There are also tax liabilities if one of them dies in the next 7 years

As pointed out it may be classified as deprivation of assets if it is done purely to attempt to dodge care home fees , if they self fund then the council won't look into their finances

Jeepers_Creepers

Hi Cats.

What do your numbers mean: "Otherwise it will be !!!8216;deprivation of assets!!!8217; if he gives some of his savings away"

Thanks.

Jeepers_Creepers

Thanks Browntoa.

How does the tax implication work - can they gift that amount now 'tax free' and then we'd only be liable for tax on it if one/both of them dies within 7 years? Are they half-liable for the tax amount - ie if 'only' one of them dies (this is macabre...) within 7 years, what affect would that have?

The proposed gift would not be to dodge care fees, but I do see how this can have an effect. Any idea what would happen in that eventuality - if d-i-l were to go in to care, would the local council expect that gift to be refunded or what?

Thanks.

AnotherJoe

Jeepers_Creepers wrote: »

Hello.

We have around £45k left on our mortgage, and my wife's elderly parents are offering to help us pay it off.

Their situation is that they have around £70k in savings, own their own house outright, and are content with their private work & state pensions - they don't really need for anything.

Whilst we would obviously welcome this(!), we don't know anything about possible tax implications. There is also the situation that dad-in-law is starting to significantly suffer from dementia, and it may be that at some point he'll need professional care.

Our ultimate plans are for us to move in to a property which has an annexe, so that my wife's parents can effectively move in with us when they can no longer look after themselves, but we are hoping (for their sake as well as ours...) that this is still a few years off. D-i-l, however, may require residential care before then if he deteriorates significantly.

Is there any reason why they cannot help pay off our mortgage, and are there any longer-term implications for this?

Many thanks for any guidance.

Yes, save it for the care, at home and later in a home, they will need to manage this awful condition, i can state unequivocally that if it hasnt hit home yet they dont really understand the impact its going to have, and spending that money on respite care, in home carer, and so forth, will be a godsend.

AnotherJoe

Jeepers_Creepers wrote: »

Hi Cats.

What do your numbers mean: "Otherwise it will be !!!8216;deprivation of assets!!!8217; if he gives some of his savings away"

Thanks.

The numbers (and exclamation marks) are there because the people who manage this forum dont wish to fix the issue with smart punctuation they caused when they updated their software a few weeks ago.

And deprivation of assets mean the local authority could come and demand that £45k back from you.

Catswhiska

It’s a fault with commas on this forum

Catswhiska

The council can go back as far as they like to trace money that has been given away. Best to let your parents keep hold of it, especially as dementia has been diagnosed. Have your parents done tenants in common on their home. They can then leave their own share of the house to the children. If one dies then that share will be protected from care fees as it is willed to somebody other than the spouse

Red-Squirrel_2

AnotherJoe wrote: »

Yes, save it for the care, at home and later in a home, they will need to manage this awful condition, i can state unequivocally that if it hasnt hit home yet they dont really understand the impact its going to have, and spending that money on respite care, in home carer, and so forth, will be a godsend.

I have to agree 100% with this.

They may well be very very very glad of that cash in the bank over the next few years. If I were you I would graciously decline their generous offer. Your mortgage is only small anyway.

Also, have they got POAs sorted? If not, that should be top priority.

AnotherJoe

Great point, we left POA too late for my dad, get it done now if you can.
And as someone else said, putting house as tenants in common.