Inheritance implications of parents living with me

The_Famous_Flame

Hello Forumites,

I may have found the answer elsewhere, but appreciate the knowledge and experience of you lovely people!

My elderly parents own a house worth around £500k which they have lived in since year dot. They are still in good health, but my family are moving away to a house that has a self-contained flat. We are discussing them moving with us so they are not isolated, and we can enjoy much more time together (and support them when their care needs increase).

My father has amassed enough savings so that he is just over the £1 million IHT threshold. He is determined not to leave a penny to the taxman and is stubborn enough to remain in his current house should the residence nil-rate band be affected (RNRB)

From a quick search it looks like as they 'owned a property on 8 July 2015, when the laws were first tabled, they would retain the right to this additional RNRB allowance.'

Has anyone here experienced this scenario, or is aware of the current rules?

Many thanks!

Keep_pedalling

The RNRB will not be lost if they sell their house and move in with family, this is covered by the downsizing rule. The same applies if they moved into rented accomodation or residential care. 

Savvy_Sue

I just hope his stubbornness doesn't extend to refusing to pay for any / all of the following:

Carers if their health deteriorates

Help around the home, eg cleaning, gardening, DIY and decorating 

Aids and adaptations as needed

Taxis

Etc etc etc

Because there's a difference between supporting someone, and meeting all their needs. 

Keep_pedalling

You say he is just over the £1M, doesn’t you mother have any savings? 

The_Famous_Flame

Keep_pedalling said:

The RNRB will not be lost if they sell their house and move in with family, this is covered by the downsizing rule. The same applies if they moved into rented accomodation or residential care. 

Many thanks KP! 

The_Famous_Flame

Savvy_Sue said:

I just hope his stubbornness doesn't extend to refusing to pay for any / all of the following:

Carers if their health deteriorates

Help around the home, eg cleaning, gardening, DIY and decorating 

Aids and adaptations as needed

Taxis

Etc etc etc

Because there's a difference between supporting someone, and meeting all their needs. 

I'll have to hark back to my OT days! But no, he's not that stubborn. Although I could imagine him doing a Reggie Perrin and walking into the ocean.

The_Famous_Flame

Keep_pedalling said:

You say he is just over the £1M, doesn’t you mother have any savings? 

I imagine some but very little really. Dad only has this money through inheritances he received in later life.

silvercar

I’d consider carefully having them move in with you. All fine while everyone is fit and healthy, when needs change it can become very difficult. I’d consider them moving nearby rather than with you.

——
Musing here. If they do move in with you, can you charge them a notional rent that becomes payable on death ie out of the estate, thereby reducing the size of their estate and so any tax bill? Keep it under £7,500 a year and use the rent a room scheme to avoid any tax burden on yourself?

Savvy_Sue

https://forums.moneysavingexpert.com/discussion/comment/81855861#Comment_81855861

I'd agree, but would slightly disagree with the musing.

Why would you wait until after death to have the 'rent' paid? Why would you not agree payments for all costs associated with them living with you from the outset?

If they are in the self-contained flat, it is likely to have its own council tax. And I'd expect utilities to be separate. So that part is easy enough. And it should not be difficult to work out what you could charge if you were able to rent it separately. You might not wish to charge as much as that, but you should still know …

The_Famous_Flame

https://forums.moneysavingexpert.com/discussion/comment/81856840#Comment_81856840

Savvy_Sue - you have described the situation almost perfectly! The flat does have it's own council tax and utilities. Parents have said they would pay rent - nowhere near the £1000 we have been told it's rental value is, but I'd prefer parents living below than strangers.

They also have a holiday flat near the house but across the solent on Isle of Wight, so not practical for them to move there. I have thought I would keep registered and paying the flat's council tax and utilities and parents could give me some rent back. They could register their flat as their main residence and so we wouldn't both be penalised as second home owners.

The_Famous_Flame

https://forums.moneysavingexpert.com/discussion/comment/81855861#Comment_81855861

Thanks Silvercar - It's a tricky one. We are moving to the coast from London and I'm hoping to have a good few years with them whilst I work from home. I think it will also do them the world of good. But appreciate as care needs change I may not be equipped to manage.

Also, my dad doesn't want to buy another property because of stamp duty so it's the only way I can drag them along!