Deprivation of assets etc

Gorffennaf

My mum (86) has serious mobility issues and relies on my sister and brother-in-law (who live very close by) to help her, as she lives alone. I live several hours away so can't help very often. However, both my sister and brother-in-law would now like to move to a property with a garden and outhouses.

My mum would really like to move in with them, and we all think this would be a good idea, but mum would need to sell her house so they could afford somewhere to accommodate them all.

As it stands, my mum's assets in her will are split 50/50 between my sister and myself. If my mum was to sell her house and split the proceeds now, i.e give me my share and then use the rest to buy a place with my sister, we understand that would be seen as deprivation of funds if she eventually needed residential care. Presumably we'd need to pay it back - bit tricky if my sister is living in the house it bought, and she wouldn't want to move again. We assume we'd also be liable to Inheritance Tax.

Or, if mum kept my 'share' of her proceeds and then needed it for care, what would then happen to the 50/50 aspect on her death? Again, I wouldn't want my sister to have to sell up or owe me anything.

Lots of people do have elderly parents living with them, and surely it's the best for them, so how do they split the assets in this sort of situation? We feel like we're missing something obvious. 

Sea_Shell

I think you may have to resign yourself to not getting any inheritance ☹️

elsien

It's  not an inheritance until she is no longer with you. Until then what is in the will is completely irrelevant to the circumstances now. There aren't any shares or proceeds until that point.
With regards to your mother putting money into a property, I would suggest that is something that she and your sister take proper legal advice about. 

Gorffennaf

Thanks for the replies.

Yes, I put 'share' in inverted commas as I'm aware that everything is hypothetical at this point, and I fully expect there to be nothing left after care fees, even though my mum is very keen everything is split equally.

However I suppose my question is still what would happen if my mum bought a house with my sister. It sounds like it could be too complicated if she then needed full time care as presumably my mother's assets would need to be used, I guess meaning my sister could lose her house if they jointly owned it. 

This does a shame though, if it puts people off caring for parents in their home, and means my mum must continue to live alone.

elsien

I suppose it depends how much your mother would be putting in. If they owned the different amounts in proportions, would your sister be able to borrow extra money to buy her out if the time came?

Gorffennaf

I don't think so - my sister and husband are in their fifties and wouldn't really want to borrow more at this point. Mum's contribution would mean they could buy a big enough house for her needs as well.

Brie

Slightly different scenario with us as OH is an only child but after FiL died we did exactly as your sister is proposing.  MiL sold her flat, we sold our house and the 3 of us moved into a place that could accommodate her limited mobility while still giving us enough room so we could have privacy.  

Eventually she had to move into a care home after a long stint in hospital and the council got quite ratty about it all, claiming deprivation of assets etc as some (not all) of her money went towards the purchase of the shared house.  At first they said we would need to sell it to fund her care even though that might make my OH & myself homeless.  Then they realised that I was already over 60 so they weren't allowed to force us to sell the place so were told that they would put a lien on it so that when we eventually do sell (20, 30+ years?) they would get back a portion of the money spent on her care.  I talk to a legal expert (provided via my employer) who stated that there were ways around this because without us combining our households she would have gone into care years sooner and the council would be funding her care for a much longer time.  I believe the idea was that we would need to calculate how much care would have cost them after her funds had run out assuming she had sold her home on going into care.  (so initially self funding and then the council taking over).  The legal opinion was that the council didn't have a leg to stand on - assuming MiL lived with us for a number of years (nearly 5 in the end).  And ultimately at the very end MiL (96 at the time) didn't live too very long once in a care home and so the council never needed to actually pay anything out.  

Your council may take a different view of things but it might be good to have a conversation with a solicitor prior to actually purchasing a place.  One thing that is likely to be needed is, if there is a mortgage needed for the purchase, that your mom will need to sign a letter stating she is gifting the money to Sis rather than owning a portion of the house.   Might need to do that even without a mortgage but it would be money well spent to get proper expert legal advice.

Sea_Shell

Does you sister need ALL the proceeds of the sale of mum's to get something suitable without a mortgage?   Or just some?

elsien

I was going to ask how close to 60 your sister is?
 However, that still doesn’t solve the issue when Mum passes as to how to access any inheritance you may have without your sister having to remortgage or sell up. 

Brie

elsien said:

I was going to ask how close to 60 your sister is?
 However, that still doesn’t solve the issue when Mum passes as to how to access any inheritance you may have without your sister having to remortgage or sell up. 

I thought the idea was the mom sells the house, gives half to OP and half to Sis so that's the "inheritance" sorted. 

Keep_pedalling

Gorffennaf said:

I don't think so - my sister and husband are in their fifties and wouldn't really want to borrow more at this point. Mum's contribution would mean they could buy a big enough house for her needs as well.

That is good because it simplifies matters somewhat. Under no circumstances should your mother simply give the proceeds of her hours sale away as it also giving away her security should things go wrong such as you sister getting divorced, pre deceasing your mother or simply not being able to cope if your mothers heath deteriorates seriously.

As they won’t be looking for a mortgage you mum could loan them the money interest free and put a charge on the house to secure it. The loan would still form part of her estate so the 50/ 50 split on her death would mean you both get the same of anything left over.