Family loans

jennyringo

I'm hoping sunrise can help. My mother is in an assisted living centre. She pays rent and pays for her care. We've sold her house to pay for this. She's 98. I calculate she gas enough money to last her at least 7 years, unless she needs 24 hour care or gas to go into a home. If she lends my son 20,000 to help him buy a house, will it be seen as her giving away her money in order to get help with payments?

elsien

How long will her money last if she does need to go into a care home, if she gives 20K away? 

(also just checking what country you are in ?)

You’re calling it a loan but would there be expectation of it being paid back and any 
formal paperwork setting out payment terms? Or would it be a gift in practice? 

Because if it’s a loan, it could cause problems with him getting a mortgage.

Brie

I would be asking the assisted living place how much the next level of care is.  My mom is in something similar and she is about to move up a level to a more controlled environment and a higher level of care being provided.  I believe it's about a 50% increase on what she currently pays monthly for her assisted living flat.  

So I'd be doing a calculation to see what the higher level of care costs per month and look at what her income is that can be used in addition to her savings.  Cost it out over 5 years with a 10% increase in costs (but not income).  Can she afford it?  If not then she can't gift a large sum to anyone for any reason even assuming it would be allowed.  Granted my suggested calculations are very weighted on the side of caution.  

What would happen if she runs out of money?  Would she and you be ok with her being moved to a place the council is willing to pay?  They would at that point look at any gifts she's made over the last decade or two and consider deprivation of assets.  And look to your son to pay back the money he has had from her.  

Keep_pedalling

It really depends on how much she has in the way of savings and income. Could you provide that info please?

Lending the money is almost certainly a non starter if your son also needs a mortgage so it would really have to be a gift. 

jennyringo

I was thinking that if she called it a loan, I could guarantee repayments if it was seen by the authorities as giving it away in order to reduce her money and therefore be eligible for earlier help from the council. I guess the problem really is that there is no way of knowing when/if she'll need extra care, or for how long. I'm really just trying to find a way to help my son. He's been paying exorbitant rent for years but the banks don't take that into account.

Thanks for all the input though.

Ergates

If the money is a loan, will your son be able to afford the repayments?

xylophone

Can you assist your son?

See

https://www.moneysupermarket.com/mortgages/guarantor-mortgages/

PRAISETHESUN

Does she still have capacity, or are you operating her affairs under PoA? If the latter I'd be especially careful of gifting/loaning out money as it could argued that is not in her best interest, as well as depriving her of assets. 

Overall I think it's probably a bad idea, especially is you forsee any circumstance that she would need the money and be forced to call in the loan to be repaid. Rather than having the rigmarole of you guaranteeing your mother's loan to your son, you might as well just guarantee your son directly and leave her out of the whole affair.

Yorkie1

It seems to me that your plan is fraught with risks of being seen as fraud one way or another (I'm not suggesting that that is your intention, of course).

Calling it a loan to avoid Deprivation of Assets issues, will cause mortgage issues.
Callling it a gift to avoid mortgage issues, will cause DoA issues if that becomes applicable.
If the intention is that you would repay any 'loan' rather than your son, that is risky.