Equity Release. Yes Or No

[grandpajoe]

HI folks, like a lot of people my wife and I are in the horns of a dilemma regarding our long term care(If needed of course) and making sure our three children get what they can, legally, from our estate when we finally depart.
We have heard so much about the pitfalls of leaving the house to them and meanwhile being taken into care. It crossed my mind t'other day that we should think about doing an equity release for as much as we can and splitting the proceeds three ways now then carry on and see what happens to us both in the ,hopefully, long term. We are both fit and in our mid 70s. Any thought please. Thanks in advance Chris

[jourdain2]

Won't monetary gifts from the equity split have to be given at least 7 years before your death to avoid penalties? I'm sure I read about that, but I'm not an expert by any means. Daughter is a Chartered IFA so she does the brainwork in that area. I can ask her, if she is in one piece after a netball match tonight. I do know that giving power of attorney is one of the best things you can do, because things can change so quickly. It feels horrible to sign it and I accompanied signature with threats of haunting if I disagreed with action taken. :)

[ubasses]

Unless the rules change this is Deprivation of Assets and the authorities will still treat the money as if it is yours. There is no official cut off point of how many years they can go back. This risks your children having to pay the money back, if they have, for example, used it to purchase a property a charge can be taken over it.

[ubasses]

The seven year rule Jourdain mentions is for inheritance tax purposes.

[Zacs-Master]

You need the advice of a professionally qualified financial advisor, not the hearsay advice of a website forum.

[Hymie]

Today the government announced tax increases that would pay for social care costs such that you should not have to sell your home (to pay for those costs). That said, the scheme is planned to start in October 2023 and each person could still pay up to £86k towards their personal care.

Often where a couple are living together, when one becomes ill the other provides the care (for the most part). However in a worst case scenario you could end up paying up to double the £86K figure.

With today’s house prices, paying out £86k should leave a reasonable amount of equity (in a mortgage free property) to pass on to your children.
As others have said, take professional advice on your situation. But equity release schemes seem a bad deal to me based on the interest rate charged, given that they are guaranteed to get their money back with no possibility of you defaulting on the loan.

[grandpajoe]

Thank you all for your help Chris