parents estate

[coskermike]

Hi There.
My parents are in their late sixties and own their own home out right. My dad has had new hips and suffers from back pain but apart from that they are basically both doing ok. I hear stories where elderly people in the same position as my parent s become to ill to look after themselves but because their estate is worth more than X amount the authorities wont fund the health care so either the house is sold and the health care is then basically funded from that sale or the house is just taken away from them and then the authorities pay for the health care?? I am told though, that if the estate is signed over to their children a certain amount of time before any health issues occur then the authorities cannot touch the estate ?? is this true and if so how do we go about protecting the estate. I am not raising this question to protect any sort of inheritance purely to protect what my parents have worked all those years to have.
Many thanks
mike

[cathfromsaron]

any amount of 'deliberate' disposal of assets will mean you will still ahve to pay out of inheritance! however, they should spend it whilst they can ...

[Barmaid]

If the "substantial" reason is for the transfer is to defeat a contribution to CH fees, then it can still be clawed back.

However, if one needs care and the other doesn't, the one that doesn't need care won't be forced to sell the home to pay for care, although it could be subject to a statutory charge.

Full guidance here

http://www.dh.gov.uk/...AndGuidance/DH_125831

[VHG]

Note that if they house is signed over to someone else your parents would still have to pay them a "fair rent", and tax is payable on the rent received.

[Kassee]

I thought that any money/assets that change hands is Ok if 7 years pass by. For example if the house was transferred over to the grandchildren, and 7 years went past, then there is nothing anybody can do about that.

I know of a family that swopped homes, ie the children moved in with their elderly parents to look after them, the house was transferred into their name and their adult children (who are in their 50s) their house is transferred over to their children, and presumably transferred into their names. Of course the intention is to look after and take care of their parents in their old age, and if seven years pass, then this is all OK. Or so I thought. I know with this family the grandmother did go into a care home in the last couple of years of her life.

I also know of another friend who helped her parents to sell their home when they were in their late 70s, she also sold her own home and a larger house was purchased for them all to live in together, there was enough room for two separate lounges, and two separate bathrooms. At the same time as all this went on, both the two grandchildren, who were in their twenties, managed to secure properties for themselves as well, so I assume there was surplus money available. Anyway quite a few years went by before my friend's parents passed away. Although they never really settled into their new home.

I think it makes sense, looking after your children and grandchildren. Especially in this day and age, when children cannot afford a home as properties have become a ridiculous price.

[coskermike]

Thank you for your replies guys, I will study the link from Barmaid. The reason this came up was that the story goes, a neighbour of my parents, a couple in their seventies, the lady fell at home and broke her neck, when the matter of her future care was brought up, they were informed that because they owned their own home, it mean that their estate wealth was such that either the husband paid a figure of £400/week towards the wifes care home costs or the authorities would take the house. Now i dont know if this story is exactly accurate but it started me thinking about my parents situation.

[Barmaid]

Kassee, the 7 year rule applies for inheritance tax. There is no limitation period for transfers to avoid care home fees.

Everything you need is in CRAG Mike. POst again if there is anything you don't understand.

[bednobs]

you are confusing inheritance tax liability with paying for care fees.
the council can go back as far as they want if you have deliberately disposed of them for purposes of avoiding care home fees.
the 7 years you are thinking of is for inheritance tax purposes
i have to ask though, wouldn't your parents want to use the money they have accrued over their lifetimes to pay for the care that they want to have, rather than be stuck with care that the council provide, which will probably be most inferior

[coskermike]

I have started reading Barmaid, not a small document though, wow !!
thanks again
mike

[bednobs]

ps if you are not worried about an inheritance, rather them having the money they've worked for - what better way for them to spend their money than on making life comfy for them

[coskermike]

you are right there bednobs, it was just scary to think that, in the neighbours story at least, that they knew nothing of any means testing and possibly selling their home until the time when they were already in a stressful situation with the wifes injuries. It is nice to know that my parents could make a decision based on prior knowledge rather than having to make a rushed decision at a tramatic time, their money is, just that, their money, so if it is their informed decision to put it towards private care then so be it.

[Kassee]

Oh - I didnt realize it was inheritance tax with the 7 year rule. So what happens if houses are sold, so that children can look after their parents in a larger home with a grannie annex etc, and then as the situation becomes more difficult one can no longer manage. So what happens then?

I can now think of yet another family, granny's house was sold, her daughter had an extension built on the side on her own detached house and granny moved in to the annex. Everything was fine for many years, but in the end the old lady did go into some sort of care home. The family still live in the detached house, with the side extension grannie annex. Their adult children lived in the annex for a number of years.

[tamborine]

If their property was written away & they remained at home they would have to prove they pay the market rent. Why cant you employ a private carer or care for them yourself.

If the responsibility is on the tax payer then its only right their assets should reburse the costs.

[bednobs]

if the parent owned part of the larger house still, then that part would form part of their estate and be dealt with in the normal way

[Barmaid]

In that case Kassee, I suspect that the legal and beneficial title to the home was in the children and wasn't given away to avoid care home fees. Indeed, it is arguable that it was given away to ensure that care was not required at all. In that case, the LA are going to have the devil's own job proving diminution of capital or a beneficial interest in the child's home.

[bednobs]

oh wow, i was so scared when i read that bm had put an answer on here :)

[Barmaid]

lol bednobs, but you got it right!!!! (Again)

[MartinBev58]

Hi Mike

It may be worth splitting the house into ''tennants in common'' so when 1 parent passes away their half of the house goes to the children and only one half of the house is available for care fees.
This happened with my parents house and as it happened I was widowed just after my mother passed away.
As I got early retirement in London I went back to the West Midlands and joined my father in his house which I half owned.
As I was an owner occupier they could have not taken the house as I had a right to occupy it. If I had not been in occupation then at least 1 half of the house would have been protected. As it happened my father passed away suddenly on the 7 December 2011.
I accept that people say it is unlikely half of the value of a house would be used for care fees,
A person who I used to work with in London mother got took into a care home. As it happens as she had behaviour problems and as she was sectioned under the mental health act the NHS was liable for her care home fees.
My friend was told in January 2006 she was unlikely to live for a year.
I spoke to him today and she is still alive in the care home.
As it is a specialist type of home the fees are over £1000 per week.
To date her fees would have amounted to over £300,000 more than the value of an average house.
The NHS tried to refuse her funding and even said my friend was legally liable for part of the fees as only a very expensive home would take her.
When he threatened them with a solicitor the Primary Care Trust agreed to pay all of the fees.

Martin

[JimmyCooper]

My parents have put their house in trust through their solicitors to get around having to sell it to pay for care. I don't know all of the ins and outs but that would be worth looking at.

[chas2008]

there was talk of capping it at £50,000 a few months ago not sure how that ended up..