Parents selling house..advice needed

56cheffy

Not sure if this is in the right place, but......

My parents are selling their house and going into a council flat and giving large amounts of money to their children.
At the moment they do not need to go in to care, but what would happen in the future if they did but they had given most of their money away? Would anyone be able to claim it back to pay for their care?

Thanks

SaveTheCheerleader

I thought council flats were for people who desperately needed somewhere to live?

IveSeenTheLight

SaveTheCheerleader wrote: »

I thought council flats were for people who desperately needed somewhere to live?

It would not seem fair to sell a house, pocket the profit and move into a council house, however, to get a council house you need to accumulate points on the council housing list.
Obviously they have been able to move up the list accumulating points in order to get a house.

To answer the OP's question, I think there is a 7 year time limit where "gifts" would be subjected to capital gains tax, however if after that time, then your parents if needing to go into a home would be treated as other people in the same position.

One word of caution though.
Places are not gauranteed at old folks homes and with an aging population this ccould become problematic.

I had a relative who was admitted to hospital and ended up neeing to go into a home.
As they had a house to sell, it was relatively easy to get into a nice old folks home, while there were others who did not have a home were left waiting in the hospital for available places.

Its a fact of life that old folks homes are ran privately now and charges are more dearer for people arriving privately as opposed as from the council where the charges are fixed.
This means that the availability for a place with someone coming from their own home is significantly easier than those without.

Bear this in mind when you accept your "gift" from your parents

56cheffy

SaveTheCheerleader wrote: »

I thought council flats were for people who desperately needed somewhere to live?

I agree, they are..but more and more people are doing just this to make sure they leave their kids their inheritance and it is not eaten up in care fees, which can be as much as £800 + pcm....

merlinthehappypig

The 7 year limit doesn't apply in this case. I'm not sure that it is a CGT issue either, but don't pretend to be an expert in that area.

There are two issues that need considering;

Firstly and most importantly the issue of care should it arise. If the council consider that your parents have 'deliberately deprived themselves of assets' which, from what you have said, they will, then any asssessment of payment towards care will be made on the value of the your parents assets before the transfer. You and your siblings will almost certainly be liable for the cost of care and the council can force you to pay, even many years down the line.

The only usual exception to this rule is when the capital is being used to buy a house where the parents are going to live with one of the children so that they can get the care they need without going into a home. Even if they eventually go into a home, the council won't take into account the capital that went into the house.

Secondly, any gift over a set limit is likely to be subject to inheritance tax if the value of the estate is more than £600000. I assume that this isn't the case if they are getting a council house, but stranger things have happened. Even if the estate is less than £600000 in value there are new rules aimed at stopping parents giving away money to reduce the value of the estate which might affect you badly. These new rules are little known and complicated and unless you take professional advice this might cost you a lot more than you think.

I can't see your parents getting any benefit of the doubt from the council or tax authorities if they do what they are suggesting. It will be seen as a deliberate attempt to get someone else to pay for something that they can afford themselves.

I'm not passing any sort of judgement here, just offering advice.

seven-day-weekend

It is possible to get a council place if you have your own house. You might be one of the people in 'desperate need'.

My sister and b-i-l got a bungalow because of their health. My sister had Alzheimers and needed to be cared for, my b-i-l (her main carer, who has Parkinsons) could no longer manage this and the large house that they had,.

They had tons of medical points and were granted a bungalow, then sold their house. They obviously paid full rent for the bungalow.

My sister has since died and my b-i-l is giving up the bungalow and going to live with his daughter (on one of the Orkney islands!).

To the OP, bear in mind what other posters have said about the quality of care home they may be put in if they do not have the money. Paying for it themselves gives them much more choiice.

56cheffy

They are both getting on in life, dad is 75, mum 80..they live in a house that is far too big for them (like many old folk these days) they have trouble getting up and down stairs, a large'ish garden that they are unable to attend to so would like to go in to a bungalow, they would like perhaps to be able to buy one of there own in the small town where they have lived all their lives to stay near family and friends, but there are few if none available, but there are council ones available. They would obviously have to pay full rent.

margaretclare

56cheffy wrote: »

Not sure if this is in the right place, but......

My parents are selling their house and going into a council flat and giving large amounts of money to their children.

Are you sure it's just a council flat and not a sheltered housing flat? Council flats are getting as scarce as hens' teeth. My eldest granddaughter got one because she was homeless, but even that wasn't simple and she waited ages. Not easy!

Apparently this kind of thing used to be done around here but not any longer. If you have a saleable property you can't automatically move into a sheltered accommodation flat. People apparently used to do it and then have the money to live on - this was before property prices went to silly levels, which has only been in the last few years. Now, I'm told you can sell a property which has become too big/unmanageable etc but you can't just rent - you buy into a sheltered accommodation complex, and if the sale of property doesn't quite cover, there are part-buy part-rent schemes.

At the moment they do not need to go in to care, but what would happen in the future if they did but they had given most of their money away?

Well, once it's gone it's gone, isn't it? They would be stuck with lack of choice and have to accept whatever they were given.

Would anyone be able to claim it back to pay for their care?

I would think that 'anyone' might question whether they'd ever had a lot of money before, which might have unaccountably disappeared, and might want to know why.

Margaret

seven-day-weekend

56cheffy wrote: »

They are both getting on in life, dad is 75, mum 80..they live in a house that is far too big for them (like many old folk these days) they have trouble getting up and down stairs, a large'ish garden that they are unable to attend to so would like to go in to a bungalow, they would like perhaps to be able to buy one of there own in the small town where they have lived all their lives to stay near family and friends, but there are few if none available, but there are council ones available. They would obviously have to pay full rent.

Have they actually been told they can have a council place??

margaretclare

seven-day-weekend wrote: »

Have they actually been told they can have a council place??

I am always amazed when people talk about parents 'getting on in life' because, you see, I'm 72 and DH is 73, and we just don't think of ourselves in those terms! We're still busy living our lives and will continue to do so, hopefully for a good while yet. We also never give a thought to 'whether we might need to go into care', which is what a lot of people seem to worry themselves about.

Myself, it's my opinion that people are better to give some thought to these matters when they're a little bit younger, like their 60s, not wait until the stairs become unmanageable etc. After all, once the young'uns have grown and flown, you know that the house is gonna be too big for 2 people. The costs of maintenance, repairs, redecoration etc, this is why many of the people we know (the ones whom DH teaches about computing) have gone into sheltered accommodation. They all say it has given them a new lease of life.

Also, the OP mentioned garden becoming difficult and that parents would like a council bungalow. Most council bungalows, around here anyway, are the older type which tend to have quite large gardens, in fact there's one just round the corner from us and the man has a large vegetable garden which he tends lovingly.

Margaret

Running_Horse

My mum was offered a semi sheltered flat near my brother in an area she has no other links with, so it must depend what is available locally?