Putting house into trust or into childrens name

BenS66

Hi, I hope someone can give a bit of advice.

My father has been diagnosed with terminal cancer and so my parents are checking their will is as they want it to be. One concern they have is that once my father passes, if my mother falls ill in the future and has to go into a care home then the government could force her to sell the house to pay for the bills. (Their house is mortgage free)

To stop this happening it seems they have two options:
1) put half of the house into a trust once my father passes, or
2) put half of it into my name now

There seems to be so many different views as to the pros and cons of each option, can someone please explain simply what the pros and cons of each are and which is generally considered the best thing to do?

I own my own house so my concern is that if they give half of their house to me now, when I sell my home (which I intend to do in the next year/eighteen months) then as I would be seen to have two houses I would have to pay capital gains tax on mine when I sell it. I'm not sure if this is correct or not?

Any advice/clarification would be greatly appreciated. It seems that all the solicitors they speak to won't offer any advice and just say that they will do what my parents instruct, but they don't know what to instruct them!

Many thanks

downshifter

BenS66 wrote: »

Hi, I hope someone can give a bit of advice.

My father has been diagnosed with terminal cancer and so my parents are checking their will is as they want it to be. One concern they have is that once my father passes, if my mother falls ill in the future and has to go into a care home then the government could force her to sell the house to pay for the bills. (Their house is mortgage free)

To stop this happening it seems they have two options:
1) put half of the house into a trust once my father passes, or
2) put half of it into my name now

There seems to be so many different views as to the pros and cons of each option, can someone please explain simply what the pros and cons of each are and which is generally considered the best thing to do?

I own my own house so my concern is that if they give half of their house to me now, when I sell my home (which I intend to do in the next year/eighteen months) then as I would be seen to have two houses I would have to pay capital gains tax on mine when I sell it. I'm not sure if this is correct or not?

Any advice/clarification would be greatly appreciated. It seems that all the solicitors they speak to won't offer any advice and just say that they will do what my parents instruct, but they don't know what to instruct them!

Many thanks

Does she have a separate 'nursing home fund'? My mother does, quite apart from her house value, and has calculated that it would last her for about 10 - 15 yrs in care from the date she goes in (at current pries and allowing for inflation). If yours has something similar to pay for care then there would be no requirement to sell the house.

If the house is the only asset then it would need to be sold if family etc can't pay for her care - otherwise how should the care home be paid for?

DS

Mojisola

BenS66 wrote: »

One concern they have is that once my father passes, if my mother falls ill in the future and has to go into a care home then the government could force her to sell the house to pay for the bills.

The government won't force her to do anything - if she is assessed as being a self-funder, it will be up to her to pay the bill, just the same as if she stayed in a hotel now.

As a self-funder, she will have her pension/s and Attendance Allowance and will then have to find the money to make up the difference. If that requires the house to be sold, that will have to be done. She won't be living in it.

Most people don't go into residential care and, of those who do, most don't live for very long. Of course, some spend years in care - it's an unknown factor when you're making plans.

Would you rather have an inheritance or have your mother able to chose where she spends the last months of her life? If you visit a few local care homes and see whether you would want her staying in the cheapest ones, that might help with the decision-making.

Far more important than ring-fencing an inheritance is asking her to sort out a POA so that you can make decisions on her behalf if she should become incapable.

victor2

I was looking into a similar thing by changing the ownership of the house from the usual "joint tenants" to "tenants in common", where each parent owns half the house and can leave their half in their will to different people.

I can make no recommendation of the company in the link below at all, as I have no experience with them, but it seemed like some useful information. You (or more importantly your parents) probably need to talk to a solicitor on this subject, but it might be helpful:
http://thewillpractice.co.uk/property-trusts.html

lisyloo

Any advice/clarification would be greatly appreciated

I've been involved in choosing nursing homes for 2 parents (after exhausting care at home/hospital).
The first time we went to about 20 and many of those on the local authority list were dreadful. We found a decent one but it was out of the budget so we had to go to "panel". We won but we argued strongly and articulately about their needs and resisted constant pressure for "top-ups".
Second time the LA wanted to split up MIL and FIL who'd been married 60 years to save money even though there was a place for FIL in the same home as MIL who was LA funded.


So my advice is to suggest that your parents do keep their home to fund it for their own care if it's required and go into a home where and when they choose.
Note that the local authority only pays for residential support as a last resort so sometimes people are left later than is ideal due to financial pressures. For example both MIL and FIL had poor hygiene and had a variety of hygiene related issue (like UTIs and thrush) as the carers at home don't force people to have showers if they don't want to.
Decent care homes keep even incontinent people scrupulously clean so they don't suffer any such issues.


I also had to go to the court for my MIL to get deputyship.
This was expensive, slow and quite arduous (at least 8 sets of forms).
I would suggest your mother get LPAs put in place for both finance and health to cater for the situation of losing capcity.
her setting it up in advance if far easier than asking the courts to do it after the event.

pjcox2005

BenS66 wrote: »

I own my own house so my concern is that if they give half of their house to me now, when I sell my home (which I intend to do in the next year/eighteen months) then as I would be seen to have two houses I would have to pay capital gains tax on mine when I sell it. I'm not sure if this is correct or not?

Just to confirm this is incorrect, principal private residence relief is based on which house you use as your home where you own multiple.


So if you always have lived in your home (current house) and sell it then any gain would be exempt from CGT.


For stamp duty land tax, there is an additional 3% to pay where you own multiple properties but again this won't apply if you sell your main home and then buy another home to live in (subject to certain time frames).


I think the challenge you'll have is that if you hold 50% of your parents home, and it goes up in value, then when you come to sell this would be subject to CGT on that half.


I won't comment on trust vs ownership, or the morale question of who should pay for care home fees as it's not my area/I know people have very different views on this subject.

lisyloo

pjcox2005 wrote: »

I won't comment on trust vs ownership, or the morale question of who should pay for care home fees as it's not my area/I know people have very different views on this subject.

It’s not just about who should pay morally.
It’s about whether you want them to end up somewhere you would put them over your dead body, whether you want them far away from family and friends and to receive that level of support at the very minute e.g. to struggle at home until they fall.

LA wanted to put MIL and FIL 15 miles apart which might not sound much until you consider he was in a bed and her a wheelchair.

As it was they spent his last 11 days in the same home together, but we had to fight to get them together.
If they hadn’t had strong advocacy they would both have been in over my dead body territory separately.

peachyprice

BenS66 wrote: »

Hi, I hope someone can give a bit of advice.

My father has been diagnosed with terminal cancer and so my parents are checking their will is as they want it to be. One concern they have is that once my father passes, if my mother falls ill in the future and has to go into a care home then the government could force her to sell the house to pay for the bills. (Their house is mortgage free)

So just how will any care home fees be paid if not from the value of her assets? Will you and her both be happy to put her in a hell hole of a council funded care home just so you get your full whack of inheritance?

Personally I don't give a damn whether or not I inherit from my parents estate so long as they live out their days in comfort and dignity. But each to their own.

getmore4less

Simplist approach is TIC with IPDI trust for survivor.

Currently tax friendly and ring fences the asset.

Also allows preserves transferable nil rate band and use of both residential nil rate bands if needed.

BenS66

getmore4less wrote: »

Simplist approach is TIC with IPDI trust for survivor.

Currently tax friendly and ring fences the asset.

Also allows preserves transferable nil rate band and use of both residential nil rate bands if needed.

Thanks for that, but what is TIC and IPDI?

getmore4less

Tenant In Common

Immediate Post Death Interest.