Loan to mother in law

Tiggy777

Hi all

My mother in law is in the process of purchasing a new retirement property but is short by about £20,000 on a property costing approx. £180,000

She has enquired if I could lend her the money to be repaid when she dies and the property is sold.

Whilst we are ok to do this I just wondered the best way of setting things up and the risks involved, mainly about her going into care and the property being used to pay for fees at some stage in the future and possible how to protect the money against inflation (for obvious reasons don't really want to charge interest so wondered if a possibility was to link to a percentage share in house.

Would welcome any comments or suggestions.

Many thanks for the help and your time

Regard

Tiggy

[Deleted User]

She could amend her will to give you £20k before whatever distribution she then wants to make of her estate.

It's not without its dangers, but nothing is.

iolanthe07

Be very careful. My in laws lost their home to care fees, and if you're in England you don't get any local authority help with care home fees until you're down to around £20,000 (don't know the exact figure.)

normanna

I've heard there's such a mark up on a lot of new retirement properties that people are finding it really difficult to sell if circumstances change due to negative equity as the price premium on new is much higher than other new builds and the facilities promised don't always materialise. Search for some BBC Moneybox podcasts from earlier this year/last year - worth a listen.

ReadingTim

iolanthe07 wrote: »

Be very careful. My in laws lost their home to care fees, and if you're in England you don't get any local authority help with care home fees until you're down to around £20,000 (don't know the exact figure.)

No, they used their home for care fees - why should the taxpayer tick up the tab when they have the means to pay? Or do you really mean you "lost" your inheritance...?

agne.bag1

A friend was talking about this the other day and it was suggested to her to do something called tenants-in-common.
Unsure if you can do this on a retirement property though.

Gaz83

iolanthe07 wrote: »

Be very careful. My in laws lost their home to care fees, and if you're in England you don't get any local authority help with care home fees until you're down to around £20,000 (don't know the exact figure.)

Why would they need their home if they're in a care home?

glennstar

Never lend money to friends and family.

I suggest you gift it to her and see what happens... assuming you can afford 2K.

MEM62

ReadingTim wrote: »

No, they used their home for care fees - why should the taxpayer tick up the tab when they have the means to pay? Or do you really mean you "lost" your inheritance...?

You hit the nail on the head RT.

AnotherJoe

To get back to OP's actual question, just document it as a loan which she acknowledges with a signed statement, witnessed by two others and also take a copy of your and her bank account statements showing the money being transferred between you.
The loan agreement can specify that the amount due upon death is either matched to the change in value of the apartment as a %, eg apartment goes up by 25%, OP gets back £25k, (though that could lead to a decrease) or use a published government figure such as RPI or CPI.

iolanthe07

ReadingTim wrote: »

No, they used their home for care fees - why should the taxpayer tick up the tab when they have the means to pay? Or do you really mean you "lost" your inheritance...?

Why the hostility? Of course it is right that people should use the wealth in their property to pay for their care. I was just trying to point out a potential pitfall.