Buying a house with an annexe for my elderly Dad

lookstraightahead

Davesnave wrote: »

I'd agree with this, It's especially exhausting for someone with an emotional involvement, and easy to slip into a situation where one's own life and responsibilities suffer.

I would agree if there was no flexibility to change the situation but there is enough financial stability here to take it a day at a time. If dad lives a long way away (not sure he does) then as a child I would want him close. Then if circumstances change/health deteriorates things can be put in place swiftly.

middleclassbutpoor

Tom99 wrote: »

What about Pre-Owned Assets Tax?

I’m not sure that would apply. He is gifting the cash proceeds. If he dies within 7 years, there will be IHT to pay.

If wanted to be on the safe side, just get an appraisal for what the rent would be and ensure this is paid at full market rate. I’m not 100% convinced this would be required but I’m not offering professional advice....

As I said, they need to seek professional advice.Their full situation could be then considered to plan correctly with all facts known

The other potential option to explore would be to put in place a whole of life insurance policy and place in trust for the inheritance tax bill. This could be funded from income from the assets invested if income not able to meet this.

xylophone

Remember that (very sadly), mild dementia can worsen fairly quickly so that the person will need day and night care.

My relative has PoA for his relative who was diagnosed a couple of years back.

At that time although hard of hearing and a little confused, she could read, write, answer written questions, use a zimmer frame, eat with a knife and fork at table etc.

She is now functionally deaf, virtually immobile, doubly incontinent, needs regular turning night and day to maintain skin integrity, needs spoon feeding and supervision when drinking.

Might it be better to look for a really excellent home as close as possible to where you live?

This might be less disruptive for your father and for you?

OldMusicGuy

Similar happened with one of our relatives. Started off being just forgetful and confused for a couple of years, in the last 12 months things have got really bad and is in a similar situation to xylophone's relative above. They had not planned properly for care, refusing to believe how bad things could get, and the family are in a very challenging situation right now.

Have you thought about what would happen if he needed to go into care? Would he have enough funds? I would imagine selling his share of the house to finance care might be difficult.

00ec25

middleclassbutpoor wrote: »

Not that I’m aware of.

There will be no capital gains tax

Providing the payment of care is self funded, there isn’t a deprivation of asset scenario to worry about.

It’s just inheritance tax should he die within 7 years.

You should seek professional advice though...

what do you mean by "gift" the 400K
if father occupies the annex but is not a co-owner then it is a gift with reservation and the "7 year rule" is irrelevant.
even if the GWR failed, there is, as Tom mentions, also Pre Owned Asset Tax which may apply instead

OP needs to take professional advice and since the core of the issue is :
a) inheritance tax planning
and
b) care home fee avoidance

OP would probably be best to start with an estate planning specialist who is a member of STEP (accountants and solicitors per se are not necessarily specialists in such issues)
https://www.step.org/about-us

they may later on need to see someone else, but given the sums involved and the fact father already has a diagnosis that means care is inevitable and 100% foreseeable, a forum such as this is not the place to attempt a DIY solution

is there a power of attorney in place before father further loses capacity to sign one? Solicitor for that if not

Jofrances

Thank you all very much for your help and suggestions. Just to clarify, thankfully I do have POA for both health and welfare and financial, though I haven’t yet had cause to use it. I agree with everyone that has mentioned the traumas of living with someone with dementia, it’s something that I’ve been giving great consideration to since my Dad was diagnosed a year ago. The annexe we are looking at has two bedrooms and although my Father struggles to see that he may need more care, my plan would be to have full time carers using that second bedroom. The annexe has a door through to the main living area of the house and part of the appeal is that I will be able to go in and out whenever I wish to check up on the carers and keep him safe. He currently has a family friend that we pay to go in three times a week and I go in the other four days, it works well, but he is deteriorating so new plans need to be hatched. Hes about a 20-30 minute drive away, but sometimes I get home and have to turn around and go back as some small thing is stressing him out so it’s not easy, I have had to give up work to be around for him. None of this is easy, in fact it’s appalling some days, but nightmare stories of some care homes and carers terrify me so really it’s about making the most of a very imperfect situation.

I will make an appointment to see a specialist solicitor to get further advice, the questions raised have been really useful, I will know what to ask, which is very reassuring, thank you so much.

bouicca21

Tbh from what you say a good care home might be the best option. We also had someone going in every day plus visits to a day care care centre. When that was no longer enough it was time for a home.

And you need to shop around - the best ones will have waiting lists. I fully appreciate that that there have been scandals about mistreatment but presumably you will be visiting regularly so will be alert for any signs of bruises, fears etc. I certainly became eagle eyed. But I was reassured to see how kind the staff were and how well Mum was looked after.

There is a bit of a guilt trip in coming to terms with what seems like abandoning a loved one to strangers. I too went through the pros and cons of creating an annex. I am so glad I didn’t do it. In the nursing home mum enjoyed companionship, and was well looked after. There is no way I could have provided the right level of care for her needs. Love is not enough.

Larac

My dear late Mum moved in with me for a period of 18 months - very tough for all the family as in her case the 'dementia' went down hill very rapidly. What I would say if you have your dear Dad living with you, then you really need to think 'what happens when I can't cope'. Everyone gets there as there will get to a point where 24X7 care becomes a necessity. Nobody knows how long the 'dementia journey' will be for our loved ones - my Mum was in a CH for the last year of her life - something I still find difficult to deal with - guilt enormous - 2 years later - but I could not provide the 24X7 required. IMHO you need to think 'interim' and then intermediate in the knowledge that with dementia you don't know what time period will elapse between those two stages.

Cakeguts

You can't expect one carer to care for an adult with dementia if they have to do any lifting. This is why care homes are so good they can arrange for more than one person to do any lifting.



Also depending on which part of the brain is affected people with dementia can become very aggressive.

tlc678910

Jofrances wrote: »

my plan would be to have full time carers using that second bedroom.

My relatives with dementia have carers at home. One carer at a time, waking both day and night - they can be quite active in the night. This costs three grand a week. If it gets to the point of needing constant care you need to consider whether your fathers money will last long enough for care at home. A residential place might be 1-1.5k a week I think. The care at home won’t be funded once the money runs out and without private funds your father/you won’t have much choice in residential places. Very difficult decisions.

Tlc