Disabled parents home

[pgtips]

Both of my parents are old and disabled and I am worried that when one of them passes away, the other will have to be put into a home. When this happens the council will sell their home to pay for the care required, so I would like to purchase it now.
If I do so what will I be liable for, ie tax liabilities?
If I purchase their house will teh council be forced to care for my remaining parent at their cost?

[Peter D]

The LA will regard this of deprivation of estate and will ignore that you own the house. Add to this that they look back more that 10 years to establish the estates value. You could apply at the time for differed care fees
Local Authority Deferred Payment Scheme for Care Fees.

One option when an elderly person enters long term residential care is to take up the Local Authority 'deferred payment scheme' whereby the care charges - over and above any personal contributions of pensions etc - accrue as a debt to the LA who take a charge on the property. The property can then be 'let' to boost (after tax) the personal contribution and thus reduce the overall debt. Where the property is the only 'home' owned by the person in care, is capital gains still payable on any gain from the time of entering residential care until the property is sold (probably on death)?
And:
http://www.carersinherts.org.uk/article ... re-act.htm.
Some of my clients have had good success with when the surviving spouse goes into a home you do a quite refurb and rent the property out. As the property is still in there name, then it is taxed as there marginal rate. The house will remain free of CGT for 36 months, read IR283 on the HMRC web site, letting relief will then kick in an cover upto £40,000 of further gain in the property value.
The profit from the renting goes to paying any fees, may be assisted by you or the deferred method. When the inevitable happens the bill is settled and the if you are the beneficiary, the property passes to you. At present I have 3 clients whos surviving parent has passed away and the property was remained in there estate. From memory the longest was 4 years before they passed away and the shortest was 2 yeras. Regards Peter

[bob.fraser@towrylaw.]

If you buy the house, as you state, then there will be no deprivation of asset since you will have paid your parents for the home. Of course, this payment would then be assessed for the care costs.

Alternatively, your parents could consider owning the home as tenants in common, and gifting half the home to their children on the first death. This will at least avoid 1/2 the home being taken into account for the care costs.
Please note that there may be IHT issues surrounding this course of action, but if their total estate is less than £624,000 then it wouldn't be a problem.

Bob Fraser
Chartered Financial Planner

[Peter D]

Well spotted bob, I missed the words purchase it now. As you say this equity would still be in there estate. This is always a rock and a hard place scenario. I take your pont regardsin a TinC but the LA may well and do ignore such actions if they believe it was intentional to reduce the estate. Some LA are ruthless but one can only try. Regards Peter

[Lee Young]

Peter

I would be interested to learn about any instances were a local authority has successfully challenged a will of a deceased owner where it left the share of the property to the children/others rather than the survivor.