Tennants in common with a parent ... Pros and Cons

sidneyyoungblood

I'm considering buying a house as tenants in common with my father and need advice on the pros and cons.

He’s 72, owns his home outright, and I’m nearly 50, single, with no property of my own—making me increasingly anxious about both our futures.

Originally, I planned to buy a property outright, but circumstances have changed. I currently live with my dad, who is independent but has grown used to me being around since moving back home during  lockdown.

I can just about afford to buy a house suitable for both of us outright for cash, but I’m unsure if it’s the right move since he will be left alone in a property he cannot maintain and is in need of a lot work - plus he hates living in the area. 

My dad  wants to put the" new " home solely in my name if we bought it together , but I’ve heard this could be seen as deprivation of assets if he needs care later.    If bought as tenants in common would the same issue arise with a charge being put on his percentage of the house ..

I really do not know what to do for the best . 

Bigwheels1111

Cost, solicitors etc.

My Mum & Dad had this all was well until my Dad passed.

Now there is a fee of a few grand to sort out the change back to you, House insurance is invalid, only 3 companies

will take her on at 4 times the price, not sure what its all about, sorry never asked her.

Olinda99

Deprivational of assets only comes into play should your father apply for means tested benefits

Only you know whether you are or will be poor enough to need to do this going forward

In any case in order for deprivation of assets to come into play the assets have to be given away a) when the person knows or should reasonably know that they need means tested benefits in the near future and b) the reason for the giving away is to deliberately make yourself poorer so you can apply for them.

Keep_pedalling

Olinda99 said:

Deprivational of assets only comes into play should your father apply for means tested benefits

Only you know whether you are or will be poor enough to need to do this going forward

In any case in order for deprivation of assets to come into play the assets have to be given away a) when the person knows or should reasonably know that they need means tested benefits in the near future and b) the reason for the giving away is to deliberately make yourself poorer so you can apply for them.

It also comes in to play if residencial care is required.

eskbanker

Olinda99 said:

In any case in order for deprivation of assets to come into play the assets have to be given away a) when the person knows or should reasonably know that they need means tested benefits in the near future and b) the reason for the giving away is to deliberately make yourself poorer so you can apply for them.

I think that's over-simplifying, but much depends on the rigour with which a local council might apply the rules when assessing financial circumstances for care costs, so if OP's father was to give up a wholly-owned property that could indeed be relevant:

It’s not just giving away your money that could be seen as a deliberate deprivation of assets. Different ways of reducing your money or property could count too, including:

• giving away a lump sum of money, for example as a gift
• suddenly spending a lot of money in a way which is unusual compared to your normal spending
• suddenly spending lots of money on living in an extravagant way, such as gambling
• transferring the title deeds of your property to someone else
• using savings to buy possessions, such as jewellery or a car, which would be excluded from the financial assessment
• using your assets to buy an investment bond with life insurance
• putting your assets into a trust that they can't be removed from.

https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/deprivation-of-assets/

p00hsticks

sidneyyoungblood said:

My dad  wants to put the" new " home solely in my name if we bought it together , but I’ve heard this could be seen as deprivation of assets if he needs care later.    If bought as tenants in common would the same issue arise with a charge being put on his percentage of the house ..

If you buy it as Tenants in common then it would be in both your names anyhow (and you can vary the percentage of how the two of you own it in proportion to how much each of you put in ) so there would be no need for him to put a charge on it.  It would be a second home for him and so you'd need to pay the higher rate of SDLT (assuming you are in England). 

If you buy it in your name only your father could then put a charge on it for the amount that he put in (although this could be problematic if you need a mortgage). If he simply gave you the money then you are corrrect in thinking it could be considered as a deprivation of assets when considering any means-tested benefits or care needs 

/in either case his interest in the property (either as co-owner of having a charge against it)  would be included in any financial assessment if he needed care or other benefits. Could you then afford to then buy him out or repay the loan to protect your own home ?  

Keep_pedalling

The main issue here is the long term security of your father if something happened to you. You say you can just about afford to purchase a house outright for the two of you, so why not do that, your father can move in with you and keep the bulk of the proceeds of the sale of his house. He can them pay you 50% of all household expenses.

Exodi

Keep_pedalling said:

Olinda99 said:

Deprivational of assets only comes into play should your father apply for means tested benefits

Only you know whether you are or will be poor enough to need to do this going forward

In any case in order for deprivation of assets to come into play the assets have to be given away a) when the person knows or should reasonably know that they need means tested benefits in the near future and b) the reason for the giving away is to deliberately make yourself poorer so you can apply for them.

It also comes in to play if residencial care is required.

^ this is the fundamental point (and the OP explicitly refers to care).

I think everyone should work off the reasonable assumption that they may need care in later life or to put it the other way I don't think it would be acceptable to give away everything you own and expect to go into a care home paid by the taxpayer as you didn't think you'd ever need care.

I would suggest putting the new home solely in the OP's name (if bought together) could be seen as deprivation of assets. What is the property worth? If his estate is below £325k, then a revealing question would be plainly asking him why he wants to put it in your name (assuming there was no IHT - though I suspect you already know the answer). If he can't give a clear answer for this, aside from stitching the taxpayer up with his care, then he can expect he will find it hard to answer should the council ask him.

Unrelated but did I read this right?

sidneyyoungblood said:

I’m nearly 50, single, with no property of my own
<...>
I can just about afford to buy a house suitable for both of us outright for cash

Is this to suggest you have hundreds of thousands of pounds in cash? Make sure you check out the best savings rates if that's the case! Why not buy a house yourself?

Keep_pedalling said:

The main issue here is the long term security of your father if something happened to you. You say you can just about afford to purchase a house outright for the two of you, so why not do that, your father can move in with you and keep the bulk of the proceeds of the sale of his house. He can them pay you 50% of all household expenses.

Again, agree with @Keep_pedalling. And he'd have the money to enjoy his twilight years, go on holiday, etc.

Olinda99

eskbanker said:

Olinda99 said:

In any case in order for deprivation of assets to come into play the assets have to be given away a) when the person knows or should reasonably know that they need means tested benefits in the near future and b) the reason for the giving away is to deliberately make yourself poorer so you can apply for them.

I think that's over-simplifying, but much depends on the rigour with which a local council might apply the rules when assessing financial circumstances for care costs, so if OP's father was to give up a wholly-owned property that could indeed be relevant:

It’s not just giving away your money that could be seen as a deliberate deprivation of assets. Different ways of reducing your money or property could count too, including:

• giving away a lump sum of money, for example as a gift
• suddenly spending a lot of money in a way which is unusual compared to your normal spending
• suddenly spending lots of money on living in an extravagant way, such as gambling
• transferring the title deeds of your property to someone else
• using savings to buy possessions, such as jewellery or a car, which would be excluded from the financial assessment
• using your assets to buy an investment bond with life insurance
• putting your assets into a trust that they can't be removed from.

https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/deprivation-of-assets/

you missed out the beginning ...

When your council is deciding whether getting rid of property and money has been a deliberate deprivation of assets, they will consider a few things:

1. If you knew you would need care and support at the time you gave away your assets.
2. If paying for care and support was a significant reason for you giving away your assets.
3. If you knew you would need to contribute money towards your care

which is exactly what I said

eskbanker

Olinda99 said:

eskbanker said:

Olinda99 said:

In any case in order for deprivation of assets to come into play the assets have to be given away a) when the person knows or should reasonably know that they need means tested benefits in the near future and b) the reason for the giving away is to deliberately make yourself poorer so you can apply for them.

I think that's over-simplifying, but much depends on the rigour with which a local council might apply the rules when assessing financial circumstances for care costs, so if OP's father was to give up a wholly-owned property that could indeed be relevant:

It’s not just giving away your money that could be seen as a deliberate deprivation of assets. Different ways of reducing your money or property could count too, including:

• giving away a lump sum of money, for example as a gift
• suddenly spending a lot of money in a way which is unusual compared to your normal spending
• suddenly spending lots of money on living in an extravagant way, such as gambling
• transferring the title deeds of your property to someone else
• using savings to buy possessions, such as jewellery or a car, which would be excluded from the financial assessment
• using your assets to buy an investment bond with life insurance
• putting your assets into a trust that they can't be removed from.

https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/deprivation-of-assets/

you missed out the beginning ...

When your council is deciding whether getting rid of property and money has been a deliberate deprivation of assets, they will consider a few things:

1. If you knew you would need care and support at the time you gave away your assets.
2. If paying for care and support was a significant reason for you giving away your assets.
3. If you knew you would need to contribute money towards your care

which is exactly what I said

The point is that they're likely to consider all of those factors, not just those first three.

Linton

Under your proposed arrangements is Father fully protected?  For example what happens if you die first?  Could he become homeless. If he was a joint owner the house would automatically pass to him and the house could be sold and used to for care should that be required. What if you and he fall out?

You and he need to consider all the what-ifs.