Funeral and care home costs .

alfmurph

I am 68 . My wife is 64 . We have one son . Both in reasonably good health .
No life insurance as we let our 10 year endowment run out years ago as the pay out was terrible .
Been in touch with a lawyer who has estimated cost of £1500.00 to set up life rent so that we own half of house each and then when  one of us dies our son will own that half meaning council cannot sell house for care home costs . Is that how it works please .

Also been thinking about funeral costs for both of us estimated at around £8k at present time but in say 20 years this might double . Do not want to take £8k out of our pension pot just in case we live to 100 and are too old to start paying this up over 25 years . Also new life insurance policy will cost a lot .

So how about taking our £8k and buying shares which might keep up with inflation and pay out for our whole funeral costs .
Any suggestions welcome . 

p00hsticks

I'm not sure what you mean by a life rent.

At your ages, whilst the two of you are alive, if one of you goes into care the value of the proeprty will be disregarded when looking into care home contributions.

If you hold the property as tenants in common (rather than joint tenants) then you each own half the property and can will to whoever you wish. If you will it to your son rather than the surviving spouse then you need to ensure that the will allows the spouse to remain living in the property for however long they want. As I understand it if the remaining spouse needs to go into care then - unless the son is living in the property and is over 60 - the authorities will take into consideration the value of their half of the house when calculating care costs. They may not expect it to be sold straight away, but would expect payment at some point. 

Perhaps this is what the 'lawyer' is referring to - putting the house as tenants-in-common and setting up wills to provide a lifetime trust for the surviving spouse to continue living in the property ?

Note that if your son does not live in the property with you then once he inherits after the first death he will potentially be laible to capital Gains tax and lose any first time buyer incentives if he doesn't already own a property. It would also be considered as an asset of his if he should divorce or declare bancruptcy.

As to funeral expenses - if you have the spare cash around to buy shares (which may or may not cover the cost of a future funeral, bearing in mind you may need to sell at short notice when the market price is low) have you considered the pre-paid funeral plans offered by funeral directors such as the co-op ? (NOT those 'over 50' Sun-life type policies)

RAS

Nothing to stop you doing DIY on the change of ownership from joint tenants to tenants in common and then paying to get your wills written. I's actually more useful to ensure that the child(ren) of the marriage inherit something if the survivor remarries and doesn't write a new will.

And nothing to stop you both living another 30-40 years

I'm sure someone will refer you to the correct forms.

There might be IHT and capital gains issues that you need to consider. Any idea of roughly how much the house is worth?

Keep_pedalling

It does not work like that. While one of you continues to live in the house it is disregarded as far as assesment for self funding is concerned. When one of you dies the deceased half of the house will be held in a life interest trust with your spouse as the beneficiary. If they then need care the LA will take their 59% share into account when assessing the ability to self fund.

The fact that your son will then own the other half will not effect this. Not selling the house will just lead to a charge being placed on it.

In theory this will protect half the house, although even that fails is you both end up in care at the same time.

£1500 for two wills and setting up ownership as tenants in common is horribly expensive and I suspect your ‘Lawyer” is more of a salesman using fear of care fees to earn a fat fee.

xylophone

The fact that your son will then own the other half will not effect this. 

Affect - I'm not being pedantic, there is an important distinction in meaning between these two verbs.

xylophone

I'm not sure what you mean by a life rent.

Does the OP live in Scotland?

https://en.wikipedia.org/wiki/Liferent#:~:text=Liferent, or life-rent,,the property or the asset.

alfmurph

live in scotland.
house value - around £160-£170k .
2 lawyers contacted .  one said open a trust . other one said life rent .

xylophone

https://www.tcyoung.co.uk/our-blog/what-is-a-liferent

seems relevant to the situation in Scotland - it seems that using a solicitor would be advisable.

With regard to your funerals, you could  consider prepaying the whole for each of you now? 

Example from googling

https://funeralplanmarket.com/pre-paid-funeral-plans/scotland

Ms_Chocaholic

I can't offer any advice re your property but also worth setting up Power of Attorney for you both too, it's pretty simple to DIY, there's health and finance (separate ones) so 4 for each of you at £82 a piece.

buddy9

The proposal is for you and spouse to leave your share of the house to your son by will which also includes a mortis causa liferent for the surviving spouse to remain living in the house. The comment by Keep_pedalling is relevant here.

In theory this will protect half the house, although even that fails is you both end up in care at the same time.

If your house title includes a survivorship destination this 'trumps' any provision in a will, therefore a survivorship destination would need to be removed from the title as part of the process and this adds to the cost.

If you make the change, you will naturally need to consider and plan for the scenario that your son could predecease.

As regards POA in Scotland, you can combine welfare and finance doc, therefore 2 x £81 if done diy.

tooldle

My folks prepaid their funerals with the coop, and this turned out to be both cost effective and efficient as each has made all the necessary decisions in advance. All i’ve needed to do is produce the certificate/evidence of payment.
What is the plan if one or both of you go on to need care? I’ve heard people say ‘the council/government takes the house’ a few times now and this really isn’t the case. My mum is in a care home. She self funds. Her pensions pay part of the costs and the remainder comes from savings/investments, some of which came from the sale of their property. The funds are mums and nobody has ‘taken’ anything.