Shares as loan security

jcrgordon

My in-laws are in a care home and need to sell some shares to release capital to pay for their care. Their share portfolio is pretty low just now and I believe it will bounce back in the future. Can I lend them money to pay for their care and take the shares as security with the loan to be repaid when they die? Could the shares be transferred into my name? Can I get the share dividends in lieu of interest on the loan?

[Deleted User]

jcrgordon wrote: »

My in-laws are in a care home and need to sell some shares to release capital to pay for their care. Their share portfolio is pretty low just now and I believe it will bounce back in the future. Can I lend them money to pay for their care and take the shares as security with the loan to be repaid when they die? Could the shares be transferred into my name? Can I get the share dividends in lieu of interest on the loan?

I think it would be easier just to buy the shares from them now. Then the shares will be in your name and they will have the cash available to put towards their care.

jcrgordon

I would have to pay stamp duty on the transaction (0.5%) if I bought them outright.

Ben8282

So they are both in a care home? Do you know how much care homes cost? What is the value of these shares? Have they had a proper assessment of their financial situation?

jcrgordon

I know exactly how much care homes cost. They have been there for some time now. They still have too many assets to be eligible for state help with the cost but do not have sufficient cash/savings left to fund their care for more than another 2 or 3 months. Hence the need to release some capital from their share portfolio.

Ben8282

jcrgordon wrote: »

I know exactly how much care homes cost. They have been there for some time now. They still have too many assets to be eligible for state help with the cost but do not have sufficient cash/savings left to fund their care for more than another 2 or 3 months. Hence the need to release some capital from their share portfolio.

You are overlooking one very important point here. If you lend them the money their assets will be unchanged and in 2 - 3 months time when the money runs out they will then be forced to sell the shares (or some other asset if they have any) to pay for the next 2 - 3 months of their care.

jonesMUFCforever

jcrgordon wrote: »

My in-laws are in a care home and need to sell some shares to release capital to pay for their care. Their share portfolio is pretty low just now and I believe it will bounce back in the future. Can I lend them money to pay for their care and take the shares as security with the loan to be repaid when they die? Could the shares be transferred into my name? Can I get the share dividends in lieu of interest on the loan?

Do you have any authority to act in this matter.
I don't think your plan will work - but if you have the money there is nothing to stop you buying the shares on the open market.

whitepaper

jcrgordon wrote: »

I would have to pay stamp duty on the transaction (0.5%) if I bought them outright.

Probably would cost less than the cost of having a legally enforceable loan agreement with lien drawn up