Selling half a property to pay for Care Home fees

Pilsthedoeboy · 16 April 2018 at 4:36PM

It looks like my mum will need to go into full time permanent care, she owns half the family bungalow and the other half is owned by a Discretionary Will Trust which was created when my Dad died a few years ago, my son and I are the trustees. I am the sole beneficiary of both dad’s will and also my mum’s will. The bungalow is in a very desirable location in Essex and my wife (she owns the property outright that we currently live in) would very much like to buy mum’s half share with the proceeds of her home and then refurbish the bungalow and we would both then take over residence of the bungalow. I am waiting for mum’s financial and property lasting power of attorney to come back from registration anyway allowing me to manage mum’s affairs. She still has capacity and very much likes the idea of the family bungalow being retained. Mum’s care fees would then be paid using the sale proceeds plus some savings she has until she gets to the threshold of £23k when fees will be met by the LA, im assuming that at that point the obligations of my son and I as trustees will, in effect end as others (the LA) will be meeting the Care Home costs ? The other questions I need answers to are as follows;
1 are there any legal reasons why we couldn’t live in the bungalow and proceed with the sale of half the bungalow from Mum to my wife ?
2 does the trust remain in place meaning that the other half won’t be owned formerly by me until my mum passes ?
3 will my wife have to pay 50% of the bungalows value or does she pay what a willing buyer is prepared to pay for half a property as per the figure used in the means test when its completed ?
I will, of course, seek legal guidance on all this in due course, but in the meantime while everything is at a very early stage, I would welcome anyone’s comments who might be able to advice - thank you, best wishes, Brian.

Keep_pedalling · 16 April 2018 at 4:48PM

1. No, you could move in

2. Depends on the wording.

3. It should be purchased at 50% of the market value, you are in effect obtaining the entire property.

Gavin83 · 16 April 2018 at 4:57PM

Pilsthedoeboy wrote: »

It looks like my mum will need to go into full time permanent care, she owns half the family bungalow and the other half is owned by a Discretionary Will Trust which was created when my Dad died a few years ago, my son and I are the trustees.

Can you explain how this worked, how the property was owned and what exactly was in the will?

To answer your questions:

1) No, but technically speaking you should be paying half the market rent to live there. If you don't drag your heels you'll likely get away with this.

2) No idea, depends on your terms.

3) You can't pay a token amount to purchase the remainder of the property, it should be 50% of the value.

Pilsthedoeboy · 16 April 2018 at 6:20PM

Dad!!!8217;s will left his 50% share of the bungalow to my son and I as trustees under a Discretionary will trust. His letter of wishes instruct my son and I to manage the trust in such a way as to allow my mum (she owns the other half with me as sole beneficiary of her will) to have access to any income or capital she needs to maintain her existing lifestyle and to cover possible future needs such as medical expenses or the cost of residential care. Only if my mum!!!8217;s present needs have been provided for did my dad want funds diverted to other beneficiaries, namely me. The way that I see it, especially as dad!!!8217;s will was set up in this way to not only protect against inheritance tax but also to protect half the Bungalow from being used for care Home fees, once the sale proceeds of Mums half had been used up by the LA, then generally it is their responsibility to fund the care fees and provide a weekly allowance and NOT the responsibility of the trust. However, as my wife and I do have resources we will continue to fund items for living that she needs from our own funds. By the way, I!!!8217;m not trying to and but half the bungalow for a knock down price, I just don!!!8217;t understand why the LA can only value it at !!!8220;what a willing buyer is prepared to pay on the open market for half a property!!!8221; and then if my wife comes along and betters that figure why all of a sudden does that figure shoot Up to 50% of the value ? Can someone enlighten me ? Apparently there are companies out there prepared to buy half a property, but on the open market ?

susancs · 16 April 2018 at 6:44PM

In regard to the market value of the property, when we had power of attorney over my husband's uncle's financial affairs and it needed to be sold so he could go into a care home, we had to get 3 different written local estate agent valuations on the market price. They were different so we were told to only accept offers in the range of the middle valuation as accepting the lower one could be seen as "deprivation of assets". The same advice was given when MIL had to go in a care home and owned half the house (other half owned by her son), which had to be sold.

Pilsthedoeboy · 16 April 2018 at 7:14PM

Thanks, so where does this valuing half a property - what a willing buyer would be prepared to pay on the open market for half a property - come from ? Apparently LAs used to have to place a value on half a house at zero as half a house had no value on the open market, no one in their right mind would buy half a house with no chance of acquiring a good title to the property on the open market ? What has changed......if anything ?

susancs · 16 April 2018 at 7:37PM

Pilsthedoeboy wrote: »

Dad!!!8217;s will left his 50% share of the bungalow to my son and I as trustees under a Discretionary will trust. His letter of wishes instruct my son and I to manage the trust in such a way as to allow my mum (she owns the other half with me as sole beneficiary of her will) to have access to any income or capital she needs to maintain her existing lifestyle and to cover possible future needs such as medical expenses or the cost of residential care. Only if my mum!!!8217;s present needs have been provided for did my dad want funds diverted to other beneficiaries, namely me. The way that I see it, especially as dad!!!8217;s will was set up in this way to not only protect against inheritance tax but also to protect half the Bungalow from being used for care Home fees, once the sale proceeds of Mums half had been used up by the LA, then generally it is their responsibility to fund the care fees and provide a weekly allowance and NOT the responsibility of the trust. However, as my wife and I do have resources we will continue to fund items for living that she needs from our own funds. By the way, I!!!8217;m not trying to and but half the bungalow for a knock down price, I just don!!!8217;t understand why the LA can only value it at !!!8220;what a willing buyer is prepared to pay on the open market for half a property!!!8221; and then if my wife comes along and betters that figure why all of a sudden does that figure shoot Up to 50% of the value ? Can someone enlighten me ? Apparently there are companies out there prepared to buy half a property, but on the open market ?

My understanding is that someone who has lasting power of attorney is required to act in the best interests of the person for whom they have POA. I am not suggesting that you are not acting in your mother's best interests but you would be expected to get a fair market price for for the 50% of the property owned by Mum and if you were selling to anyone you would usually be recommended to have evidence of this by way of property Valuations.

Pilsthedoeboy · 16 April 2018 at 7:57PM

Thanks, fully understand what you are saying. Acting in my mum!!!8217;s best interests with or without the POA is at the top of my agenda. I know that Mum would be happy us living in the bungalow as would my late father would have been, rather than just sell the bungalow on the market with half the money paying mum!!!8217;s fees. Thats the thing here, The LA will look to Mums half to pay fees so obtaining the best price will only mean potentially more money for the LA and less money for my wife ! Of course if it comes to it we will fight the LA to try and get the best price for us, who wouldn!!!8217;t in these circumstances ? Still I don!!!8217;t get this valuing half a property on the open market for what a willing buyer is prepared to pay ( part of the means test ) - can anyone advise ?

Keep_pedalling · 16 April 2018 at 10:00PM

Pilsthedoeboy wrote: »

Thanks, so where does this valuing half a property - what a willing buyer would be prepared to pay on the open market for half a property - come from ? Apparently LAs used to have to place a value on half a house at zero as half a house had no value on the open market, no one in their right mind would buy half a house with no chance of acquiring a good title to the property on the open market ? What has changed......if anything ?

Nothing has changed, this has never been the case. This is really no different to a part owner being made bankrupt, if the other owners cannot buy the bankrupt owner out the house will end up being sold to pay the debts,

Edit - apparently I am wrong this has changed, and quite correctly the loophole has been removed.

If LAs had to value half a house at zero they would be in even more trouble then they are now.

DairyQueen · 16 April 2018 at 10:00PM

[URL="[url]http://forums.moneysavingexpert.com/showthread.php?t=5805184&highlight=bungalow&page=2#topofpage[/url]"][/url]http://forums.moneysavingexpert.com/showthread.php?t=5805184&highlight=bungalow&page=2#topofpage

So far you have made references to using your late father's money, your wife's money, and your mother's money, to house yourself. Had you considered an alternative? Using your own money?

Just a thought.

troubleinparadise · 16 April 2018 at 10:02PM

Pilsthedoeboy wrote: »

Thanks, fully understand what you are saying. Acting in my mum!!!8217;s best interests with or without the POA is at the top of my agenda. I know that Mum would be happy us living in the bungalow as would my late father would have been, rather than just sell the bungalow on the market with half the money paying mum!!!8217;s fees. Thats the thing here, The LA will look to Mums half to pay fees so obtaining the best price will only mean potentially more money for the LA and less money for my wife ! Of course if it comes to it we will fight the LA to try and get the best price for us, who wouldn!!!8217;t in these circumstances ? Still I don!!!8217;t get this valuing half a property on the open market for what a willing buyer is prepared to pay ( part of the means test ) - can anyone advise ?

It’s not more money for the LA, it’s more money for your Mum to get the best care she can using her assets. LA funding comes into play once her assets fall below the £23,250 threshold. As has been said several times, your power under LPA is to manage your mother’s assets to her advantage, not yours (or your wife’s, in this instance). The old ways of valuing a half-share as nil under the old CRAG system has been superseded, and will only become more stringent as public funds run lower and demand increases.

Whilst I understand your frustration, it is what it is. Contact the OPG if you want clarification of how you might go about this as an Attorney under their guidance. If the LA makes an assessment of your mother’s finances should you seek funding for your mother’s care, they may well question any discrepancy between the market value and what she receives, and they can refuse to fund if they feel there has been deliberate deprivation of assets.

This Age UK fact sheet might be helpful:

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

Selling half a property to pay for Care Home fees

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