How easy is it for my Mum to pay off my sister's mortgage

MovingForwards

LianeH12 said:

MovingForwards said:

Assuming your mom has a lot more in the bank and / or a very expensive property, in case she needs to move in the future to a care home or have carers coming in, also no additional state benefits (look up deprivation of assets) then your mom can pay the mortgage off directly, your sister just needs to obtain a mortgage redemption statement.

Be aware of gifts within 7 years of your mom passing away as this payment would go back into the IHT pot. She's allowed to make £3k in gifts per year.

Lastly, your mom should see a solicitor to draw up a new will or prepare the codicil. When it comes to alterations it's best a lawyer does it as they retain notes which can be used if the will is disputed.

Thank you for answering. Yes there is quite a lot more money in various accounts, as well as in her Estate. She won't have to pay for any care, as when she gets to that stage, we have agreed she will live with me and my husband and I am a Carer.

Will have to take into consideration the IHT, but do you know if there would be any difference as my sister would then be having that amount deducted from my mum's estate?

Thank you for your help.

It makes no odds to the IHT liability as it's calculated on the assets in an estate on their death, plus the gifts over and above £3k each year.

A solicitor will go through it all with your mom when preparing a new will / codicil.

Do also take onboard the comments others have made about having a back up plan. If dementia / Alzheimer's is involved it will get too much for you day in day out. I know you mean well, but it is a real possibility as times goes on. Also, if your own health changes and you need care, you cannot then care for your mom.

LianeH12

onwards&upwards said:

LianeH12 said:

onwards&upwards said:

That's a very generous gift.  Is your mum aware of the rules regarding deprivation of assets should she need to claim benefits or be assessed for social care in the future?

Yes, she is aware of DOA and there is enough money in various other accounts aswell as her estate should care need to be considered. But we have already agreed that she will live with me when she can no longer cope, and I am a Carer.

I don't mean to be negative, but please don't count on that being possible, she may well need a backup plan. You never know what the future might hold, when she needs care you may be ill or disabled yourself or your husband may be and you need to care for him, or you could have died before her, or you may not be able to afford to give up work for some reason.  Her care needs might also be beyond what you can manage on your own, no matter how skilled or dedicated you are. 

Thank you, I understand what you are saying, but there would still be enough money. She is 85 now, so although she may have quite a few years ahead, she would not be destitute.

LianeH12

MovingForwards said:

LianeH12 said:

MovingForwards said:

Assuming your mom has a lot more in the bank and / or a very expensive property, in case she needs to move in the future to a care home or have carers coming in, also no additional state benefits (look up deprivation of assets) then your mom can pay the mortgage off directly, your sister just needs to obtain a mortgage redemption statement.

Be aware of gifts within 7 years of your mom passing away as this payment would go back into the IHT pot. She's allowed to make £3k in gifts per year.

Lastly, your mom should see a solicitor to draw up a new will or prepare the codicil. When it comes to alterations it's best a lawyer does it as they retain notes which can be used if the will is disputed.

Thank you for answering. Yes there is quite a lot more money in various accounts, as well as in her Estate. She won't have to pay for any care, as when she gets to that stage, we have agreed she will live with me and my husband and I am a Carer.

Will have to take into consideration the IHT, but do you know if there would be any difference as my sister would then be having that amount deducted from my mum's estate?

Thank you for your help.

It makes no odds to the IHT liability as it's calculated on the assets in an estate on their death, plus the gifts over and above £3k each year.

A solicitor will go through it all with your mom when preparing a new will / codicil.

Do also take onboard the comments others have made about having a back up plan. If dementia / Alzheimer's is involved it will get too much for you day in day out. I know you mean well, but it is a real possibility as times goes on. Also, if your own health changes and you need care, you cannot then care for your mom.

Thank you, I know it is something that may have to be considered at some time, but I will have her for as long as possible. She is 85 now.  Luckily there it's quite a lot of money in various accounts.

onwards&upwards

LianeH12 said:

onwards&upwards said:

LianeH12 said:

onwards&upwards said:

That's a very generous gift.  Is your mum aware of the rules regarding deprivation of assets should she need to claim benefits or be assessed for social care in the future?

Yes, she is aware of DOA and there is enough money in various other accounts aswell as her estate should care need to be considered. But we have already agreed that she will live with me when she can no longer cope, and I am a Carer.

I don't mean to be negative, but please don't count on that being possible, she may well need a backup plan. You never know what the future might hold, when she needs care you may be ill or disabled yourself or your husband may be and you need to care for him, or you could have died before her, or you may not be able to afford to give up work for some reason.  Her care needs might also be beyond what you can manage on your own, no matter how skilled or dedicated you are. 

Thank you, I understand what you are saying, but there would still be enough money. She is 85 now, so although she may have quite a few years ahead, she would not be destitute.

Why the urgency to pay off the sister's mortgage?  Interest rates are at historic lows so it won't cost her that much to let her mum keep the money for in case she does need it and if she doesn't then it will come to her in inheritance with no complications.

LianeH12

onwards&upwards said:

LianeH12 said:

onwards&upwards said:

LianeH12 said:

onwards&upwards said:

That's a very generous gift.  Is your mum aware of the rules regarding deprivation of assets should she need to claim benefits or be assessed for social care in the future?

Yes, she is aware of DOA and there is enough money in various other accounts aswell as her estate should care need to be considered. But we have already agreed that she will live with me when she can no longer cope, and I am a Carer.

I don't mean to be negative, but please don't count on that being possible, she may well need a backup plan. You never know what the future might hold, when she needs care you may be ill or disabled yourself or your husband may be and you need to care for him, or you could have died before her, or you may not be able to afford to give up work for some reason.  Her care needs might also be beyond what you can manage on your own, no matter how skilled or dedicated you are. 

Thank you, I understand what you are saying, but there would still be enough money. She is 85 now, so although she may have quite a few years ahead, she would not be destitute.

Why the urgency to pay off the sister's mortgage?  Interest rates are at historic lows so it won't cost her that much to let her mum keep the money for in case she does need it and if she doesn't then it will come to her in inheritance with no complications.

The urgency is that my sister who is only 58, is dying of COPD and may only have another year. My sister lives with her fiance and he can not afford to take on the mortgage, at the moment he is on reduced hours looking after her. So my mum wants my sister's house to be paid off, so her fiance can stay there
until such time that he either moves on or dies, then it can be sold with the money going to my sister's children.

onwards&upwards

Ok, that is actually a very compelling reason.  I’m sorry to hear about your sister’s diagnosis and I hope she has longer, but it is definitely sensible to be planning ahead in that situation, and very kind of you and your mum to be thinking about the fiancé too. 

LianeH12

onwards&upwards said:

Ok, that is actually a very compelling reason.  I’m sorry to hear about your sister’s diagnosis and I hope she has longer, but it is definitely sensible to be planning ahead in that situation, and very kind of you and your mum to be thinking about the fiancé too. 

Thank you. It's very sad and horrible to see her suffering, but her fiancé has been with her through thick and thin and has brought her a lot of joy, so we want to do right by him too. It's very worrying for my sister not knowing what will happen to him when she dies, so by doing this we can help ease her worries a little 😢.

onwards&upwards

LianeH12 said:

onwards&upwards said:

Ok, that is actually a very compelling reason.  I’m sorry to hear about your sister’s diagnosis and I hope she has longer, but it is definitely sensible to be planning ahead in that situation, and very kind of you and your mum to be thinking about the fiancé too. 

Thank you. It's very sad and horrible to see her suffering, but her fiancé has been with her through thick and thin and has brought her a lot of joy, so we want to do right by him too. It's very worrying for my sister not knowing what will happen to him when she dies, so by doing this we can help ease her worries a little 😢.

Has she written a will?  As you are a carer I assume you aware of her options regarding end of life planning for her own care? 

LianeH12

onwards&upwards said:

LianeH12 said:

onwards&upwards said:

Ok, that is actually a very compelling reason.  I’m sorry to hear about your sister’s diagnosis and I hope she has longer, but it is definitely sensible to be planning ahead in that situation, and very kind of you and your mum to be thinking about the fiancé too. 

Thank you. It's very sad and horrible to see her suffering, but her fiancé has been with her through thick and thin and has brought her a lot of joy, so we want to do right by him too. It's very worrying for my sister not knowing what will happen to him when she dies, so by doing this we can help ease her worries a little 😢.

Has she written a will?  As you are a carer I assume you aware of her options regarding end of life planning for her own care? 

No, she hasn't yet, we wanted to get this money sorted so she actually owns her property. Next step is to get her Will sorted! To be honest I don't think she has really even considered planning her own end of life care, I think it's too awful for her to think about, but she knows she is getting worse and is on 24 HR Oxygen, so needs to get it sorted ASAP 😢.

onwards&upwards

LianeH12 said:

onwards&upwards said:

LianeH12 said:

onwards&upwards said:

Ok, that is actually a very compelling reason.  I’m sorry to hear about your sister’s diagnosis and I hope she has longer, but it is definitely sensible to be planning ahead in that situation, and very kind of you and your mum to be thinking about the fiancé too. 

Thank you. It's very sad and horrible to see her suffering, but her fiancé has been with her through thick and thin and has brought her a lot of joy, so we want to do right by him too. It's very worrying for my sister not knowing what will happen to him when she dies, so by doing this we can help ease her worries a little 😢.

Has she written a will?  As you are a carer I assume you aware of her options regarding end of life planning for her own care? 

No, she hasn't yet, we wanted to get this money sorted so she actually owns her property. Next step is to get her Will sorted! To be honest I don't think she has really even considered planning her own end of life care, I think it's too awful for her to think about, but she knows she is getting worse and is on 24 HR Oxygen, so needs to get it sorted ASAP 😢.

It is very hard to think about but there is a lot she can do now to make things easier as her illness progresses.  A will, appointing power of attorney, thinking about any advance decisions she wants to make to refuse certain treatments (a solicitor can help with all three of those) and hopefully she has a specialist nurse who can help her to make decisions about things like hospital/hospice/home etc, or the GP should support if not.

That said, I've known people with COPD live for many years on 24 hour oxygen, so while its definitely good to plan for the worst it is also still possible that she will have longer with her family than she expects.