Deprivation of assets by gifting?

lookstraightahead

A colleague of mine is buying a property using a gifted deposit from his parents. However his parents are in their seventies and he has been told (well, hearsay) that this might be a problem for a mortgage provider in case they need care in the future (something to do with deprivation of assets). It’s not really a lot of money compared to what they have but could this be a problem?

seven-day-weekend

As long as it does not mean that they have deprived themselves of the money in order to avoid care fees, then it should not be a problem, afaik.

AnotherJoe

Two different things here.
1. Mortgage companies are not in the position of policing deprivation of assets.
2. If they are not in a position where care is on the cards, and it hasn't been done "artificially" with an eye to deliberately moving assets,such as giving their house to their son, then it doesn't count as deprivation anyway. Deprivation needs to be done deliberately not as a side effect.

Your friend therefore is in the clear.

Cakeguts

As long as they still have enough money to pay for all their care without needing the money they have given to you then there won't be a problem.

bowlhead99

AnotherJoe wrote: »

Two different things here.
1. Mortgage companies are not in the position of policing deprivation of assets.
2. If they are not in a position where care is on the cards, and it hasn't been done "artificially" with an eye to deliberately moving assets,such as giving their house to their son, then it doesn't count as deprivation anyway. Deprivation needs to be done deliberately not as a side effect.

Your friend therefore is in the clear.

And 3, even if it *was* deprivation of assets, the practical effect of such an assessment is simply that the person who has deprived themselves of assets by giving them away is treated for means testing as if they still had the assets. This doesn't give the means testing agency, or ther person who made the gift, any legal right to 'get the money back'.

So, on a practical level the mortgage company doesn't have major worries (unless the debt is a massive LTV) because in such circumstances if the mortgage borrower decides they want to voluntarily return the gift, they'll have to finance that independently themselves and the mortgage company still has its full security over the property.

elonii

Deprivation of assets would be an issue only at the point where your colleague's parents actually needed care. They're allowed to spend their money as they please until then. If, on the other hand, they found out they had health issues that meant care was an imminent requirement and started giving money away and taking first class flights around the world - they'd be on a sticky wicket down the track.

All the mortgage company should require is evidence that the money is a gift and all will be well.

betsie

My mum is in care and most of her fees are paid by the local council now. When we had the social services financial review they only looked at the last 5 yrs.
I think it would only be a problem if either parent already has a diagnosis of Alz/dementia or other condition which is likely to mean they will need outside care. If both are fine it is not illegal to spend your money how you want too.
Not every old person ends up in a carehome.

lookstraightahead

Thank you all for your advice, mich appreciated .