Consolidation of property implications and real life stories

Willowwood79

Hi there, 

I am trying to better understand the considerations and implications of this scenario, we will be seeking legal advice once it gets a little more than an idea.

Couple 1 - 70+75yrs old 
Own main house circa £675,000 
Own a separate property next door that they currently rent £250,000
No mortgage on either property,

Couple 2 (daughter 1 of above) 42+47yrs old (3 children 10-15yrs)
£275k Mortgage on current house valued £975,000 

Person 3 - (Daughter 2 of couple 1) 47yrs
Lives in mortgage flat value £110,000, small mortgage.

Couples 1 and 2 are considering buying a house together with an annex for couple 1 valued at around 1.4 million but are considering the implications on inheritance/future potential care costs and the risk to those living in the main residence and ensuring a fair future split for person 3. 

Has anyone done this? We love the idea of having parents/grandparents near by as they get a bit older and being able to help/support them. There could be potential to have person 3 living on site as well if the right property with potential came up. this probably over complicates future decisions somewhat. Or should second property owned by couple one be transferred into person 3's name?

silvercar

If couple 1 have enough other assets and pensions it is easier. They sell their home and gift the proceeds to couple 2 who buy a big enough house for all to live together. Couple 1 then set aside the same amount as they have gifted as a future inheritance for Person 3. If they have enough disposable income they could gift the matching amount now.
Alternatively couple 1 could gift the next door rental to person 3.

user1977

Is this expected to be a cash purchase? Will be trickier if any mortgage is involved.

Keep_pedalling

Are these couples married or in a civil partnership?

buying a property together could cause significant problems in the future, what happen dis if one couple split up and want / need to sell for instance?

Brie

Biggest problem is what other money does couple 1 have? 

Easy enough to combine households in some way whether they are all in the same house or an annex is involved.  Gifting money to C2 is fine even if a mortgage is involved as long as the bank has the assurances that it is gifted not loaned.  

The issue then becomes what happens if C1 need care, either in the home or elsewhere in a residential setting.  Do they have the cash to pay for the care?  If they don't and the council needs to provide support the council will look to C2 to pay the care bills on the basis that C1 have deprived themselves of assets that would have paid for them.  

And all of that is manageable but may mean that P3 misses out on any benefit whatsoever as there's no money left to be inherited.  Again C1 could give P3 cash equivalent now but if the money runs out the council will look to them as well to pay the care bills.  

And yes, what if one couple splits up, remarries etc.  And yes it's lovely that grandparents are there to deal with kids home from school if C2 are working late.  But what about when they can't look after the kids and then can't look after themselves?  Caring for the elderly is not an easy task and the demands put on a person by society and the NHS etc are not to be simply dismissed. 

If the money is there to buy in help to do personal care or to live in when C2 is on holiday then that will make it much easier.

Hoenir

Willowwood79 said:

 Or should second property owned by couple one be transferred into person 3's name?

That may well crystallise a Capital Gains Tax liability for C1 on disposal. 

C1 are relatively young. Are they ready to downsize to an annex. While C2 seemingly gain all the financial benefits. 

Over £81k of stamp duty in buying a £1.4m home. The entire exercise is going to come at a high financial cost. 

Willowwood79

Thank you all. 

All couples are married.  I am C2.

C1 are in a very old grade 2 listed draughty house which is causing some minor health issues in winter time, which would probably only get worse the older they get, the cost to rectify this is probably the same as the stamp duty on a 1.4m house - which is what got us thinking is there a better way to do this.

This is most definitely not about childcare onsite the children are able and old enough to look after themselves, both parents work from home anyway. We want to be able to care for C1 in older age - we like the idea of them being able to stay in their home and close to us for as long as possible if we need to provide onsite care then we will. My concern is around the implications and ensuring that P3 is very much a part of this and looked after too. This all comes from a place of doing the right thing by our family and ensuring future obligations of care are met without risking our home.