Would a mortgage taken by my daughter be valid against Social Services.

[MarkParkes]

I live in a bungalow worth about £400,000.
My wife passed away just over 2 years ago and her half was left to our daughter.
At present I am OK for money but I want to go on holidays etc some with my daughter and her family but wish to pay my own way.
The bungalow needs updating and I have had estimates which total £30,000.
My son in law sugested they give me the money and they will take a mortgage against my half of the property to protect their money if I have to go into a nursing home at any point and I know Social Services can not touch the half of the bungalow my daughter owns.
We have been to see a solicitor and he has said this is possible and he does not see any reason why the mortgage should not be valid if I have to go into care.
I am just wandering if anybody has done the same and has it been OK.
Obviously my share will in effect be only £170,000. As my daughter will hopefully inherit my half when I pass away I do not plan to pay back the money unless I win the National Lottery.

Mark

[ubasses]

I cannot see any problem here, all that is happening is your daughter is registerting a charge against the property so that she gets her money back if the property is sold. All you will have to do is prove to Social Services that you needed and received the money and it was not a ruse to avoid paying care fees. With a lump of the money going on improving the property this should not be difficult and will probably increase the value of the property enhancing the share you would have available to pay your fees.

[MartinBev58]

Hi Mark

Ubasses is right.
I would however keep receipts and details of what the money has been spent on.
Social Services does have a reputation of trying to extract as much money from the relatives as they can.
If the money is being spent on an additional room for example Social Services may argue the building work was half for your benefit and half for your daughters.
If it is spent on say a new kitchen / washing machine etc and you are in the property for say another 10 years these items will have little or no value by that time so Social Services should not say they were for the benefit of your daughter but I would not be surprised if they overlook this if you or your daughter do not point it out.
As long as the expenditure is reasonable there should be no problem. If for example you are spending the money on a fifth bedroom or a second garage when you are living in the property on your own Social Services may argue it is a ruse to avoid paying care fees.
Do not forget if for any reason your daughter returns to live in the property she may not have to sell any of it as she will be an owner occupier.
This applies if her present house has been sold (see Age Concern Fact Sheet 38).

Martin

[MartinBev58]

Mark

Another thought I have just had is there should be an interest clause in the mortgage deed. It could be at a certain rate or so many percent above base rate or the debt will increase at the same rate as the retail price index.
This interest could be payable when the property is sold but if your daughter is due to inherit your half anyway it will have no practical value if you do not have to go into care.

Martin

[factor-fiction]

Are you getting any state benefits which are means tested, Mark?
If so, I'm just wondering whether DWP would regard the £30000 you receive as savings and might start checking on how you spend it to see whether they think you are deliberately disposing of savings.

[MarkParkes]

Hi Factor 30

No I am not getting any state benefits.
My main source of income is an occupational pension and my other income is just the state pension.
The main items will be a new bathroom, utility room, porch, kitchen, decorating and a new boiler and replacement of my 2 oldest radiators.

Mark

[MartinBev58]

Hi Mark

I think you must keep the receipts for this work you are having done on the bungalow.
I realise this spending on the bungalow appears necessary but in say 10 years time it will not add value to your daughters share of the bungalow.
As you will be living in the bungalow you will be using these facilities and the costs must come from your share.

Martin