House bought at Auction

Gizmono1

Hi, My mother in law went into care due to dementia 18 months ago, whilst she had capacity circa 23 months ago she gifted me £100k to give to her grandchildren when she passes

born_again

If you have been gifted 100K how can you claim UC? As the savings limit is £16K No offence intended. 
Also be aware if she is funded care, that money can be taken into account when funds run out due to depravation of funds.
This would be better in benefits section, but a couple of recent threads on the topic of rental have pointed out that the house is capital, as such no UC would be payable.
UC is joint, so you can not lose just one party. It will be ALL UC lost.

https://forums.moneysavingexpert.com/discussion/6456299/renting-out-and-universal-credit/p1

Edit to add.

I suggest you seek proper legal advise on your idea. So you do not come unstuck on a few fronts here. As you may open a real can of worms for yourself.

Ref44

Who owns the house that has been purchased? Will your mother be self funding for care fees or is she expecting the Local Authority to contrbute? These answers will detemine what the likely outcome will be.

Gizmono1

I intend the house to be in my wife's name, mother in law is self funding and this will continue for approx 11 years with the money we have left. 

theartfullodger

Gizmono1 said:

I intend the house to be in my wife's name, mother in law is self funding and this will continue for approx 11 years with the money we have left. 

Er if MIL is self funding it's her money, not yours. 

If you fund with " the money you have left" I'm confused why you are in receipt of UC.

Artful: In receipt of 6 benefits, that you you generous tax-payers you.

jonnydeppiwish!

Gizmono1 said:

Hi, My mother in law went into care due to dementia 18 months ago, whilst she had capacity circa 23 months ago she gifted me £100k to give to her grandchildren when she passes.
My intention is to use this money to buy the house and use a further 40k from her savings (I have POA) all the money from rental income will go straight to paying the fees.
I receive universal credit (joint) and my wife is in receipt of PIP for disability which is why I only work part time.
One idea to avoid further tax I have been told is to register my wife as a sole trader as she has no earning. My query is will she lose her universal credit? or is there any further implications?  

She gifted you or gifted the Grand children? Either way, if the funds run out before she dies, the. Deprivation of assets will almost certainly come into effect.

If she gifted you, then you need to let UC know that you’ve had that money for 23 months and repay any of the benefits you have received.

Unfortunately, there is no way of you avoiding this as she is now in care unless she does before the money runs out.

Gizmono1

The money was gifted to the grandchildren for a deposit for a house when they can buy one, however we thought to invest to help pay the care home fees as a better return or possibly not now? 

poppy12345

Gizmono1 said:

The money was gifted to the grandchildren for a deposit for a house when they can buy one, however we thought to invest to help pay the care home fees as a better return or possibly not now? 

So it was gifted to you and not the grandchildren? You need to report the changes to UC and this will then end. You will need to repay everything back that you've received since you were gifted the money. PIP won't be affected.

propertyrental

Gizmono1 said:

Hi, My mother in law went into care due to dementia 18 months ago, I assume that should be a 'full stop' and the next sentence is unrelated?
whilst she had capacity circa 23 months ago she gifted me £100k
very unclear. Gifted to you or to her grandchildren.
to give to her grandchildren when she passes.
she may have intended for you to pass it to the grandchildren in due course, but that is up to you. Meanwhile, it's your money.
My intention is to use this money to buy the house
you mean her house?
and use a further 40k from her savings (I have POA)
Is this in her best interests, or yours? As POA you have a legal duty to act in her best interests. Buying her house (in your name or your partner's) could easily be seen as a conflict of interest.
all the money from rental income will go straight to paying the fees.
so under your plan, you will use your money, from the rent from your house, to pay her fees? (presumably after you've paid your tax on the income)?
I receive universal credit (joint) and my wife is in receipt of PIP for disability which is why I only work part time.
I'm no expert on benefits, but if you/your wife own a property worth £X00,000, and which generates a rental income, surely that makes you ineligible for any means-tested benefit?
One idea to avoid further tax I have been told is to register my wife as a sole trader as she has no earning. My query is will she lose her universal credit? I would think so. or is there any further implications?  

Yes, don't forget Capital Gains Tax if/when you sell the property since it will not be your main residence if it is rented out.

And of course SDLT may be relevant when you 'buy' her property. And if you already own a property, 2nd property SDLT may (will) apply.

deannagone

Don't you have to prove you have got the best price possible for the property when selling it in these circumstances?  Doesn't really sound like this will be achieved.  I am afraid the whole scheme sounds a bit open to legal/financial challenges and could cause enormous problems for both yourselves, your grandchildren and the person you are supposed to be acting for.  It might be best to have someone professional and independent manage the parental finances.., its possible some conflicting needs and boundaries have gotten blurred. Not intentionally but blurred nonetheless.

housebuyer143

As others have said, a BTL house owned by your wife is an asset that is taken into account for UC, it's also generating an income so will make you further ineligible regardless of whether or not you use the money for care fees. 
The £100k unless it's in trust to your grandchildren which is clearly isn't should be declared and your UC will end. Using £40k of her money to buy your wife a house doesn't seem in her interest tbh. When her money runs out it's likely the council will claw this money back so might cause you some problems as you have been claiming when you are not allowed and because you probably will have spent it by then.

Are you declaring the interest on that £100k to UC? You can easily be making £4k a year on it at the moment, which is your money. 

If you really wanted to help her then you would put the money back into her account and invest it in a high interest savings account which will generate probably a better return than the BTL would.