Selling Mum's house and buying one together query

spark1971

Hi,
My Mum is 80 and has just come to live with us as she was struggling on her own and was 3 hours away. Me and hubby have both POAs.
Our house is rented and the dining room is now her bedroom, ideally we need to get a slightly bigger house, 3 bedroom (2 kids at home) but with a larger downstairs and especially a bigger kitchen, ours is tiny with hardly any worktop space.
We discussed Mum selling her house, she agrees, and asked if she wanted to get a flat in a retirement building with a manager, she wants to stay with us.
Our dilemma is will it be ok legally to use a big portion of her house proceeds as a deposit (she's agreed) and we get a mortgage (first time buyers) and she will own half the new house?
I am an only child and her will is to be split between me and my 2 teen kids.
TIA

p00hsticks

I'm unclear whether your query relates to your plans being in her best interests in terms of you having PoA, or to do with the house buying bit.... 

From the PoA point of view, you say your mum is 'struggling' - is this just physically or is she showing signs of losing capacity ? If she is still fine mentally then she is free to do whatever she want with her money (and indeed I believe that as PoA you should respect what she wants to do and try to facilitate it, even if you don't personally agree with it) so if she is happy to give you money in return for a share of the house then legally there is no problem with her doing that. 

I can't comment on the house buying side of it, - I suspect  a mortgage company may not like the idea of a part-owner who is not on the mortgage, but the situation you envisage can't be that uncommon these days and I'm sure a broker would be able to suggest something. 

AskAsk

As said by poster above.  Should be fine, except for the mortgage.  The bank often want everyone on the mortgage, and as your mum is 80, she can't get a mortgage.  Speak to a mortgage broker and see what they say.

Brie

We did something similar with MiL.  When FiL died she was left by herself in a first floor flat which was nearly impossible for her to get in and out of due to increasing mobility issues.  So we suggested her selling the flat, us selling our house and all buying together someplace that was suitable.  Because it could only be me and the OH on the mortgage her share of the purchase price was gifted to us - about half of her house proceeds.  This just required a letter signed by her to the solicitor to say that the money was a gift without reservation and that she had no claim on the property.  This was fine for the mortgage company.  Also there were no complications in that OH is an only child so there was no siblings looking to get an inheritance from MiL.  

The only complication came when eventually after nearly 5 years that MiL had to move to a care home as her needs had become beyond our abilities.  The local authority started huffing about deprivation of assets and how they would put a lien on the property should the LA become responsible for paying for her care.  It never came to that but it was a bit alarming at the time.  The LA did in fact say at one point that we would be required to sell the house to provide money for MiL's care and it was immaterial that it meant we would be homeless - until they realised that I was already 60 yo so they could not legally make me homeless.  Frankly it was a empty threat in any case, as support by some legal advice I took at the time.  

GDB2222

How enthusiastic is hubby about this? 

MIL came to stay with us for a few weeks, and that was plenty long enough for me. 

elsien

What would the plan be if she does need to go into care in the future with regards to her share of the house? 

Oh, if indeed it doesn’t work out for any other  reasons and she then wants to move elsewhere instead? Or you and your husband split up and needed to realise the house as an asset?

Both of you, Mum and Jo need to consider all the worst case scenarios. 

It would also be helpful if at @Brie explained precisely why the local authority putting a deferred payment on the house would not have been lawful according to her legal advice. Because the situation  for someone under 60 may well be different 

Brie

elsien said:

What would the plan be if she does need to go into care in the future with regards to her share of the house? 

Oh, if indeed it doesn’t work out for any other  reasons and she then wants to move elsewhere instead? Or you and your husband split up and needed to realise the house as an asset?

Both of you, Mum and Jo need to consider all the worst case scenarios. 

It would also be helpful if at @Brie explained precisely why the local authority putting a deferred payment on the house would not have been lawful according to her legal advice. Because the situation  for someone under 60 may well be different 

The reasoning was that we were providing a care setting for MiL for an extended period that meant she didn't need LA support.  At the point the query was made MiL had been living with us for several months which meant that in that time the amount that had been given to us towards the house could have been absorbed by care home fees.  The fact that she lived with us for a couple of years longer meant that the LA would definitely been footing the bill if she hadn't lived with us as she would have depleted all of her other savings as well.  The situation wasn't made any easier by the LA lying to us a number of times about how they would handle her care but that's not relevant here I suspect.  

propertyrental

If mum is buying jointly with you, there'll be no FTB benefits as she's not a FTB.

spark1971

@GDB2222   Hubby is OK with this.
@p00hsticks She has always said she doesnt want to go into a home.
Struggling = She didnt leave the house, broke her ankle before covid and gave up going to the shops herself as a bit of a walk to the bus, the neighbour's daughter used to get her shopping and then the neighbour died late last year and although we could get a supermarket delivery to her, she was very lonely there. There is always the chance of a dementia diagnosis as her 2 older sisters are both diagnosed with it. Probably by the time her home sold and we were looking for a new place, I would have to invoke the POA, would that still work to have the deposit gifted? Or do I get something in writing now before incase she loses her capacity ?
@Brie  If she was with us for 3 years the care home fees would be the equivalent to the deposit on the house. I actually work in the office of a care home.

Bookworm105

if your mother prefers to live with you (and your wife tolerates it) then that is the overarching objective, what is good for her.

However, you mention there is a will in place. Do you have any knowledge of her overall size of estate (what happened to your father's estate, did it go to mother or to you)?

The deposit option exposes her to inheritance rule GWR - Gift With Reservation. So if her estate tips over the IHT threshold the value of the gift is still included in the estate. All depends on how big her estate is (and if she "benefits" from any unused allowance transferred to her from father)

spark1971

@Bookworm105 hubby is ok with it, my parents have been divorced for over 30 years, so he doesnt come into it.
Mum has her house approx 250k and some money in the bank 50k.