Intergenerational problem solving! Care home fees / Inheritance / Houses / etc...

kateandpete

I'm hoping someone here will have some useful insights on the following intergenerational conundrum

The problem:

1. My Grandmother (80's) still lives in the bungalow she bought with my late Grandfather in the 1980's. Over the past 3 years her mobility has deteriorated to the point where the house is no longer suitable. She has carers in 3 times a day to get her up, wash, make lunch etc. She pays for this as she has enough savings to be above the threshold for help in paying for care in the home. This is going well, she would much rather do this than have to go into residential care. However, she is housebound as there are steps both back and front and the bathroom is not disabled-friendly.
She is starting to be concerned with the increasing costs of running the house (council tax, fuel etc) and what will happen if her mobility becomes worse.
Her house is valued around 230k.

2. My Mother (60's) is recently retired and lives close to my Grandmother on her own. She goes to my Grandmother's every evening to give her dinner and takes her out once a week. I think she gets quite lonely coping with my Grandmother's affairs and ailments on her own. Her house is too big for her and is valued around 180k.

3. The wife and I (30's) and 2 small children live 150 miles from them in rented accommodation that's too small. Due to time in education and short term contract jobs since, we've been unable to buy a house previously - only to find that with prices having tripled over the past 10 years we can't afford one! We're both now in long-term stable, professional jobs and finally able to save for a deposit (managed to put away £6000 so far this year ).
I feel a bit guilty that we can't help my Mother out more, living so far away.

4. Both my Mother and myself are only children - so no siblings involved.

A proposed solution:

Around 30 miles from my work an interesting property has come on the market (OK, so someone else has put an offer in, but i really want to test the idea - hypothetically - now i've thought of it). It's a barn with planning permission for conversion to a 4 bedroom house with granny flat (separate entrance). So the idea is that my Grandmother moves into the granny flat, we live in the house, and my Mother moves to the town 2 miles from the property.

In detail:
1. My Mother would sell her house and rent near my Grandmother temporarily.
2. We raise a mortgage for £150k (around 3x our joint salary, i don't want to borrow any more than this in the current climate - and i don't think a lender would want to lend more), commit our deposit of (at least) ~15k by then, and ~35k of my Mother's from her house sale. This would buy the barn (unconverted) and a caravan for us to live in on site while the conversion is done.
3. We convert the barn, doing the structure, utilities and fitting out the Granny flat to a high quality for a disabled person. This is done using ~75-100k of my Mother's from her house sale.
4. My Grandmother moves into the flat and sells her house.
5. The rest of my Mother's house sale money and around 120k from the sale of my Grandmother's house goes to buy a house for my Mother in the town (around 170k).
6. Around 50k from the sale of my Grandmother's house goes into doing the inside of the main property. We then move out of the caravan and into the house... And sell the caravan!

Summary:
1. My Mother wins. She has a slightly smaller, cheaper (and nicer) house and has released a bit of equity in downsizing. She has help from us coping with my Grandmother and gets to see the kids more.
2. We win. We get a good house.
3. My Grandmother wins. She would live close to all of us, gets to see the great-grandchildren (and us) more. She still employs carers. Hopefully this reduces the chances of her having to go into nursing care. She doesn't have to run a home on a fixed income.

Is this idea a go-er?
My Grandmother would probably own a portion of our house. If at some time in the future she does have to go into care, will we be expected to sell the house + flat to pay for care? Will we all drive each other crazy?!
I can think of quite a few difficulties, not least the fact that properties aren't selling at the moment - and we'd have to sell 2.
I've put the idea to them and they are very interested. But obviously it needs a lot of thought - any help greatly appreciated.

posh*spice

Obvious question first - do you and your wife get along with your Mum & Grandmum?:D

kateandpete

Yes! Although we've not lived with them yet!

Actually my wife's parents had a similar setup with her grandma when she was growing up. We've asked her dad, who says that as long as there is a separate entrance, parking and they are not linked internally it works well. Grandma would be able to have visitors etc. without them disturbing us. They found it not too intrusive.

EdInvestor

The combination of moving in with relatives and running a major building project at the same time is likely to be very stressful. It might be sensible to see if you can find an existing house with granny annexe and then do the sums (and check the legals in detail as this is a very complex area). It would seem that this is basically going to be financed with Grandmother's equity in her property.Is she aware of this? Is your mother aware there would be no- or a much reduced - inheritance for her when Granny dies?

You may get caught under the deprivation of assets rule in the longer term if Granny eventually ends up needing residential care..There is no protection for the mother on care costs at all, but she may not want or need it - indeed they may both be happy to finance their own care via the care annuity system, which they could both easily afford.. .

kateandpete

Yes, they are both very aware that the project would be funded by my Grandmother's equity. Grandma is perfectly fine "up top", it's only her limbs with the problems! But you're right, it needs to be thought about carefully. Perhaps some sort of legal agreement that sets out what happens under all eventualities? That would be complex, but maybe necessary. I certainly wouldn't want to fall out with either of them over an unseen development.

Re deprivation of assets - yes, that's what my Grandmother was concerned about when we talked. It seems to be a bit of a legal grey area. She wouldn't be depriving herself of her assets in order to avoid care fees, only to mitigate the chances of care being necessary - she doesn't want to go into care at all if she can avoid it. So there is the question of intention. As I understand it, this has been interpreted differently by different courts.

What do you mean by "care annuity system"? Is this where you buy insurance with a proportion of your assets? In other words the insurer works out a likely length of time you will be in care and cost of that and covers it, whether you are in care for a shorter or longer time than they estimate? If so the property is likely to be involved. My Grandmother has about 20k in savings. Would the insurer put a lien on the house such that when it is sold they have claim to some of the proceeds? Or would they require payment at the time of annuity purchase?

I've read the factsheets provided by Age Concern about the ins and outs, but I think we need more detailed advice.

I am very conscious that anything like this would transfer most of my Mother's and Grandmother's assets to me - this makes me rather nervous. If it were to go wrong it could get upsetting for all concerned. Nevertheless, it could work out to the benefit of all.

EdInvestor

Following link explains a lot of the issues and the care annuity idea.You buy this upfront in cash at the start and it guarantees to pay your care fees until you die.Basically it tops up people's pension income to cover the shortfall in fees. Quite good value for money for older people.

https://www.hsbcpensions.co.uk/nhfa/pdfs/is6.pdf

kateandpete

Great. That's really helpful, just the sort of info we need.

margaretclare

It may work, PROVIDED that, as someone else has said, there is complete independence i.e. own front door. It all depends on how everyone gets on with everyone else.

I have to wonder: why wasn't the issue of Granny's bathroom and access via steps thought of earlier - years earlier in fact? I believe very strongly that, as none of us is getting any younger, it's a good idea to take a good hard look at your home on a room-by-room basis and spend time, thought, effort and money in making it as user-friendly as possible.

I moved to this 2-bed bungalow in 1990 with my first husband, moved from a 3-storey Pennine cottage. He only lived 18 months to enjoy it, but it has proved a godsend to me and my second husband. Just a few years ago now, we had the bathroom completely re-done, bath thrown out and proper shower unit installed.