Lifetime Mortgage in order to provide "bank of mum and dad" help with first house purchase

MWT

reheat said:

So if you go into long term care, can you end up having to use all the proceeds from your house sale on care costs, and have nothing left for family to then inherit?

It is a complex area, but do remember that with regard to care fees, the house only comes into play for the 2nd life, not the first, as long as it is still occupied by the 2nd life.

If you were both in long term care then the house would be sold as that would trigger the lenders right to be repaid from the proceeds and you would both then have to deal with the consequences of the residual capital.

Even then it does not mean that everything is necessarily used up, but it does depend on where you live, and the cost of your care vs the amount payable by local authorities...

reheat

What if there is no loan secured against the property. Presumably if the local authority factor your property equity into their means testing assessment, then presumably there would be no choice but to sell the property in order to fund the care. Or, I suppose, a LM. Presumably until virtually all the house sale proceeds have gone, and savings are down to the threshold. Bit of a shock really, given how I've assumed through most of my later life that our hard work would at least leave something for our kids to benefit from.

MWT

reheat said:

What if there is no loan secured against the property. Presumably if the local authority factor your property equity into their means testing assessment, then presumably there would be no choice but to sell the property in order to fund the care. Or, I suppose, a LM.

If you were both in long term care then a LM is not an option at that point and yes, the value of the house does come into play as long as their isn't a very restricted list of circumstances like a dependent minor child living there.

... and by that point any attempts to transfer assets/wealth to others would automatically fail the 'deprivation of assets' test.

This is one reason why some people do consider making gifts of the sort you are envisaging at a time when you are still able to reasonably hold the view that you do not anticipate needing long term care and also while you get to see the benefits it brings to the recipients.

... but you have to be comfortable with the fact that making gifts like this will reduce your own flexibility and control over choices like exactly where you go for long term care may make it harder to delay that sort of decision as you may lack the funds to support other options like in home care.

No easy choices these days and no decisions without consequences...

reheat

MWT said:

No easy choices these days and no decisions without consequences...

Ain't that the truth.

MWT

Do keep in mind though that the majority of people do not actually need to enter long term care during their lives, it is far from an inevitable conclusion...

getmore4less

The way most couples potentially protect 50% the house is with IPDI trust on first death

It does not save it if both need care at the same time but that tends to be less likely.