Can I buy my mum's house for £1?

[justiceman]

My mum (66) recently visited a solicitor to sort out her affairs in the event of her death.

She asked of she could gift the house to me and my brother 50:50 so that if she went into a care home after 7years we wouldn't have to sell the house to pay for her care. She's was told that the government had cottoned onto this and you could no longer do it.

My question is, can my mum sell the property (worth circa £200k) to me and my brother and still live their.

If so what are the implications?

Kind Regards
JM

[Peridot]

Re: Can I buy my mum's house for £1?

Hi Justiceman,
The solicitor is correct. If there came a time when mum needed care whether in her own home or a care home and needed assessment as to the fees she would be expected to contribute, then any gift or transfer of the property to you and your brother could be looked into. The LA are getting quite hot on this and are making more frequent claims of intentional deprivation of assets to avoid care fees. If they are successful in showing that the reason for the transfer or gift was to avoid care fees then the LA would include the value of the property in their fee calculation so there would be no entitlement to assistance with care fees.
Of course the property could be sold but it would have to be for the market value not an undervalue. Of course even if you and your brother were able to raise £100k each to buy the property off her the proceeds of sale would of course go to your mother, so again would be included in any assessment of care fees calculation, if the time arose.
Your mother could gift the property, but the same situation would arise regarding any future care fees. In addition should your mother pass away in the 7 years following making the gift then the value would be included in her estate values (albeit at a tapering amount over the 7 years).
You can appreciate care is expensive and we are all living longer so the fees are only going to increase unfortunately. People are no longer able to ensure their children or whoever else can inherit their properties except of course the very rich.
Hopefully the need for mum to have care or move into a care home won't arise, but if it does for the majority of people who are lucky enough to own their own home it's value will need to be used for fees, whether funding care coming to you at home or selling the home to go into a care home.
Having seen the basic care homes available to those who do not have the finances to assist with or fund their care, I would not wish either of my parents to be in one I'm afraid. They can be very poor facilities. The nicer homes do cost significantly more.
Probably not what you want to hear but I hope it clarifies matters for you.

[Diana M]

Re: Can I buy my mum's house for £1?

Peridot, the issue of "intentional deprivation" is the thing which interests me. I presume if Mum remains living in the property it would be hard to argue otherwise.

But if a parent gifts their home to their son/daughter who then lives there either alone or with their wife/husband and children do you think that may fall outside the intentional deprivation rule?

And what if Mum remained in the house in a Granny Annex or self-contained zone etc.

We oldies (I speak for myself!) may choose to downsize in our twilight years and genuinely want the next generation to have the family home which they grew up in, and which we quite frankly worked hard all our lives to pay for whist paying tax on our income/capital gains for decades.

I completely agree that someone has to pay for the cost of care for the elderly but I sometimes feel I already have over the years.

It seems the best way forward for me is to spend what I've got now

Di

[Onestepatatime]

Re: Can I buy my mum's house for £1?

A house has no value to you the alleged owner. It is only if worth to those who seek to stake a claim on it.

[Peridot]

Re: Can I buy my mum's house for £1?

Hi DiM,
Yep I'd get spending and helping people out now so you can see their happiness while you're here. Personally, I would never recommend a person signs their property over to children or anyone else and remains living there. They have then lost what is probably their main asset and will have no protection. What if the person they transferred the property to went bankrupt or got divorced? They legally then own the property and it's value would be included in any divorce or bankruptcy dealings. You've effectively lost everything including your home all because you felt you were doing the right thing to try and provide for your children for the future. As I say unless you're really wealthy there is no getting away from it.
All very well the Local Authority would have an obligation to house you and fund care if you had nothing (aside from the intentional deprivation argument) but would this really be what the family would want for you, having signed your home away? Hopefully not!
We're a long time dead so enjoy it while you're here and help out where you can, is what I say. If you are fortunate enough to have property and could downsize to free up capital then use it wisely and gift away if you want to (not forgetting the 7 year rule for gifts of course!)

[Diana M]

Re: Can I buy my mum's house for £1?

I couldn't agree more with what you say (especially the bit about spending now )

My hesitation to gift property to my daughter has always been based on the very fact that circumstances change such as potential bankruptcy or divorce, or even lifestyle things such as drug addiction or a terminal argument/disagreement.

My daughter (who I hope doesn't read this forum!) recently abandoned her engagement after living with a bloke for seven years in a property he bought but she contributed money to the mortgage via him. She walked away with nothing.

I had given them lots of stuff for the home over the years but it was seen as given to 'them' not given to 'her' so not recoverable without more drama. I'm lucky it was only things like a Jamie Oliver saucepan set not a whole house, although I loved those non-stick saucepans

Maybe a Discretionary Trust can help in some circumstances?

Di

[Peridot]

Re: Can I buy my mum's house for £1?

Some are recommending still worth a go with the disc trusts but they can still be unpicked by LA if claiming intentional deprivation. All down to timings and reasons if there is any suspicion that the reason for the trust was to prevent care fees being paid then same position again. They have pretty much got it sown up if they wish to pursue the intentional deprivation route. Some LA's are more vigorous than others admittedly but in my opinion they will all be up to speed pretty soon. There is no timelimit preventing them looking further back than a few years. If they believe the reason for the change in ownership is to prevent care fees becoming payable at a later date then it's irrelevant when the transfer happened. You would need strong evidence to the contrary, but unfortunately this is the main reason people do this during their lifetime.
Get spending