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    • Pilsthedoeboy
    • By Pilsthedoeboy 16th Apr 18, 4:36 PM
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    Pilsthedoeboy
    Selling half a property to pay for Care Home fees
    • #1
    • 16th Apr 18, 4:36 PM
    Selling half a property to pay for Care Home fees 16th Apr 18 at 4:36 PM
    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 dadís will and also my mumís 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 mumís 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 mumís financial and property lasting power of attorney to come back from registration anyway allowing me to manage mumís affairs. She still has capacity and very much likes the idea of the family bungalow being retained. Mumís 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 couldnít 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 wonít 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 anyoneís comments who might be able to advice - thank you, best wishes, Brian.
Page 1
    • Keep pedalling
    • By Keep pedalling 16th Apr 18, 4:48 PM
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    Keep pedalling
    • #2
    • 16th Apr 18, 4:48 PM
    • #2
    • 16th Apr 18, 4:48 PM
    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
    • By Gavin83 16th Apr 18, 4:57 PM
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    Gavin83
    • #3
    • 16th Apr 18, 4:57 PM
    • #3
    • 16th Apr 18, 4:57 PM
    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.
    Originally posted by Pilsthedoeboy
    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
    • By Pilsthedoeboy 16th Apr 18, 6:20 PM
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    Pilsthedoeboy
    • #4
    • 16th Apr 18, 6:20 PM
    • #4
    • 16th Apr 18, 6:20 PM
    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 ?
    Last edited by Pilsthedoeboy; 16-04-2018 at 7:06 PM. Reason: Mistake
    • susancs
    • By susancs 16th Apr 18, 6:44 PM
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    susancs
    • #5
    • 16th Apr 18, 6:44 PM
    • #5
    • 16th Apr 18, 6:44 PM
    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
    • By Pilsthedoeboy 16th Apr 18, 7:14 PM
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    Pilsthedoeboy
    • #6
    • 16th Apr 18, 7:14 PM
    • #6
    • 16th Apr 18, 7:14 PM
    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
    • By susancs 16th Apr 18, 7:37 PM
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    susancs
    • #7
    • 16th Apr 18, 7:37 PM
    • #7
    • 16th Apr 18, 7:37 PM
    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 ?
    Originally posted by Pilsthedoeboy
    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
    • By Pilsthedoeboy 16th Apr 18, 7:57 PM
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    Pilsthedoeboy
    • #8
    • 16th Apr 18, 7:57 PM
    • #8
    • 16th Apr 18, 7:57 PM
    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 ?
    Last edited by Pilsthedoeboy; 16-04-2018 at 8:03 PM. Reason: Mistake
    • Keep pedalling
    • By Keep pedalling 16th Apr 18, 10:00 PM
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    Keep pedalling
    • #9
    • 16th Apr 18, 10:00 PM
    • #9
    • 16th Apr 18, 10:00 PM
    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 ?
    Originally posted by Pilsthedoeboy
    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.
    Last edited by Keep pedalling; 16-04-2018 at 10:06 PM.
    • DairyQueen
    • By DairyQueen 16th Apr 18, 10:00 PM
    • 229 Posts
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    DairyQueen
    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
    • By troubleinparadise 16th Apr 18, 10:02 PM
    • 1,013 Posts
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    troubleinparadise
    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 ?
    Originally posted by Pilsthedoeboy
    Itís not more money for the LA, itís 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 motherís assets to her advantage, not yours (or your wifeís, 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 motherís finances should you seek funding for your motherís 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/
    • Gavin83
    • By Gavin83 17th Apr 18, 12:07 AM
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    Gavin83
    Dad!!!8217;s will left his 50% share of the bungalow to my son and I as trustees under a Discretionary will trust.
    Originally posted by Pilsthedoeboy
    I'm assuming the property was owned as tenants in common and not jointly owned? I was always under the impression that a jointly owned property automatically passes entirely to the spouse although someone who knows more about wills might well correct me on this.

    By the way, I!!!8217;m not trying to and but half the bungalow for a knock down price
    Originally posted by Pilsthedoeboy
    It does somewhat sound like it.
    • Spendless
    • By Spendless 17th Apr 18, 5:11 AM
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    Spendless
    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.
    Originally posted by susancs
    Whereas my Mum who sold my Grandmother's property last year to pay for care home fees, was told nothing like this. It was my Mum that held out for more money, the EA were pushing for my Mum to reduce the property. It never occurred to my Mum to take less so the home purchase was funded by the state sooner.
    • Tom99
    • By Tom99 17th Apr 18, 6:50 AM
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    Tom99
    The Valuation Office IHT manual sets out how to value a half share in a property, usually a 10%-15% discount on the half value, I would think you could use the same approach:

    http://manuals.voa.gov.uk/corporate/publications/Manuals/InheritanceTaxManual/sections/r-section_18/b-iht-man-s18.html
    • Keep pedalling
    • By Keep pedalling 17th Apr 18, 8:54 AM
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    Keep pedalling
    The Valuation Office IHT manual sets out how to value a half share in a property, usually a 10%-15% discount on the half value, I would think you could use the same approach:

    http://manuals.voa.gov.uk/corporate/publications/Manuals/InheritanceTaxManual/sections/r-section_18/b-iht-man-s18.html
    Originally posted by Tom99
    The rules that apply to IHT are not applicable here. The OP would not be buying half a house, they are converting a 50% ownership into a 100% ownership. The only alternative if they cannot aford to buy her out,is that the whole property is sold and 50% of the proceeds go tho the OPs mother.

    Paying a discounted price is actually depriving the OPs mother of funds that she is very likely to need, and regardless of legalities is morally reprehensable. Her needs come before an unearned inheritance.
    • Pilsthedoeboy
    • By Pilsthedoeboy 17th Apr 18, 9:02 AM
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    Pilsthedoeboy
    Thank you to those of you who have made positive comments, it is appreciated. To those who haven!!!8217;t been so kind suggesting that I don!!!8217;t want to use my own money or to not act in my mum!!!8217;s best interest, you obviously don!!!8217;t know me and I have found some comments quite harsh and hurtful tbh.
    • Gavin83
    • By Gavin83 17th Apr 18, 9:48 AM
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    Gavin83
    Thank you to those of you who have made positive comments, it is appreciated. To those who haven!!!8217;t been so kind suggesting that I don!!!8217;t want to use my own money or to not act in my mum!!!8217;s best interest, you obviously don!!!8217;t know me and I have found some comments quite harsh and hurtful tbh.
    Originally posted by Pilsthedoeboy
    I was being helpful. Expect the LA to ask for lots of evidence and go through this extremely carefully. If the paperwork isn't in order it's likely they'll include 100% of the property value in their calculations.

    If they are only considering 50% I think your question has been answered satisfactorily.
    • Cheeky_Monkey
    • By Cheeky_Monkey 17th Apr 18, 10:30 AM
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    Cheeky_Monkey
    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 ?
    Originally posted by Pilsthedoeboy
    It would appear not!
    I used to be indecisive - now I'm not so sure
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