Elderly parent moving in…

[Extensionwoes123]

I have a bog standard 3 bed house. I’ve had plans for years to get a loft extension and build a garden office, but not been able to afford it.

i have suggested to my elderly parent that they could sell their house and pay for it, and move in with me as I’d have loads of space. They agreed.

my sister has said I could be in trouble with tax/inheritance/social services as if the parent becomes unable to use the stairs or becomes more infirm the house wouldn’t be suitable, and they’d have to move into a care home.

is she right? I have a suspicion she’s just worried about her inheritance, but I can’t afford to be landed with a big tax bill if she is..

Then get a stairlift! I don’t imagine you’re planning on shoving your elderly parent into the loft extension? If your parent is on the deeds, there wouldn’t be an issue, but then your sister will want ‘her share’ once the parent goes.

You need an airtight agreement with a solicitor so your house is ringfenced. Would you ever become the carer? Would the extension be your parent’s inheritance to you? Be careful if he/she is on the deeds and then he/she does need a care home.

Your sister has a point. I think it can be done but you need to get advice from a solicitor to make sure it's done in such a way that it won't cause problems on the future.

Authorities do look out for people trying to avoid care fees/inheritance tax this way..
I think - but not certain - that there can be problems if your parent were to die within 7 years. Don't think she's trying to protect her inheritance though- she's correct that it needs to be done carefully.

No the money would be a gift. Parent would not be on the deeds so the house would go to my (adult) children as per my will if anything happened to me.

i already manage parents money for them so they don’t overspend their pension.

they are mid 80’s but reasonably well so who knows about the 7 year thing.

but then your sister will want ‘her share’ once the parent goes

this is what I thought. Does it matter if parent is not on the deeds? Can she still insist I give her “her share” when parent dies? Can she insist parent goes on the deeds if they move in?

What if your parent needs to go into a care home in the future? The Local Authority could chase you for deprivation of assets if your parent runs out of funds to pay for their own care. Please be careful and get legal/financial advice beforehand.

So you and your parent are perfectly happy to disinherit your sister?

You could end up with a shit storm
You've got:
Potential deprivation of assets
Full time care of your elderly parents - they might be okay now but ... Are you up demential, bed bound, care? 365/24/7?
Fall out with your sister - is your mum going to gift her an equivalent sum? If not I'd be upset in that position.
What security will your mum have if she doesn't go on the deeds? You could take her money and then refuse to take her in, or sell the house and move somewhere else with out her.

It's a scenario that could burn all parties.

If I was your sister and you had control over our mums money I'd be suspicious of your motives.

Exactly, but why listen to warnings? As long as her sister can't claim her inheritance 🙄

My parents are about to do something similar with my db. They'll be renovating their house in a nice area to fit my dbs family of 5, and building a granny flat for themselves. My db will pay for the renovation and ongoing maintenance. The agreement db and i have is that upon our parents demise, he will either sell up and split the $ (minus dbs investment in the renovation), or we'll get it valued and he buys me out.

I am happy with the arrangement, as it works for db, our parents will have people around in case they need it (and vice versa), and it protects our inheritance.

@Extensionwoes123 I understand that there is trust between you and your parents but in this situation you and your parents need independent legal advice. You need to think about all possible outcomes.

Sorry about the dark nature of this, but for example what happens if you are killed, injured, become disabled? If your parents gift the money and you die your money goes to your DC so they are left homeless without the funds to buy anywhere.

How will ongoing maintenance be funded? How will you split bills? What happens if they do need to go into a home, remember deprivation of assets doesn’t have a time limit.

What happens if you fall out?

Seek legal advice of whether owning your house as tenants in common with a deed of trust setting out:

• % ownership it could be 10% 90% based on a RICS valuation/amount contributed
• lifetime interest for you
• what happens as you age and decide/need to downsize
• what happens on deaths, 1st and 2nd parent as well as yours
• how maintenance will be paid for e.g. based on % ownership
• how bills are paid
• do they pay you a nominal amount of rent ( you need to check this out but a) if this is paid out of income not savings it may not be deprivation of assets, and b) may be tax free. See gmt rent a room scheme www.gov.uk/government/publications/rent-a-room-for-traders-hs223-self-assessment-helpsheet/hs223-rent-a-room-scheme-2022
• anything that can happen in life, think about it and document.

You may also all need wills leaving a lifetime interest or what happens on death. This way your parents can gift their share to the survivor then all to you, or 50:50 or 70:30 to you and your DS, but you have a lifetime interest so your house can’t be sold unless you want to sell it. Again the wills can allow for you to downsize using your parents % as part of the lifetime interest.

If the rent a room is an option then you could receive this money tax free and would have a regular monthly income to compensate for the additional caring you will do.

Remember depending on their age your parents could be living with you for 15, 20, 25 + years.

If both parents die within 7 years there is a potential IHT liability. However, provided your parents current house is worth at least £350k and they have wills leaving their estate to you and DS currently IHT only kicks in at £1million.

There is also a question of financial abuse of the elderly, which is the one your sister is hinting about. Historically property has been a good investment and better than savings accounts. I know you initially don’t get the cost of building extensions etc but over a decade the % they contributed to the house can increase by ££. A deed of trust shows your parents had separate legal advice and freely entered into this arrangement.

What you are doing is wonderful but you need to think through all the options to be fair to your parents, to you and to your sister now and i15, 20, 25 years from now.

The parents will still says 50:50 split of any assets when they die so they aren’t disinherited?

parent’s house is a large home on the coast so worth enough for them to pay for the work (and the remaining mortgage to reduce bills when they move in), and still have a few hundred k for care home fees if needed.
Which should be enough?

we hadn’t planned to give my sister an equivalent amount as parent isn’t moving in with her- the money is being used to benefit the parent if they are moving in?
Parent is moving in with me so the money is being used to improve my home. Sister already has a

i was going to see about power of attorney once they live with me so I can make decisions.
At the moment I have their permission from them to make financial decisions.

few hundred k for care home fees if needed.
Which should be enough?

per parent or combined?

@Extensionwoes123 If your parents are not on the deeds then their “share” does not form part of their estate. So your DS would not inherit any of the money gifted to you.

The agreement is between you and your parents, personally I would involve your sister in discussions. You may find as they age you need your sister to help out and considering her now may mean she is more willing to give help.

My remaining parent lives with DB, I visit twice a week and also take them away for mini breaks. As my parent ages I can see I will also need to stay in DBs home to give respite care when DB goes on holiday etc.

I don’t see how your parents benefit tbh

The parents will still says 50:50 split of any assets when they die so they aren’t disinherited?

Well, apart from the amount that you're getting to spend on your house, your sister won't be getting her share of that.
Don't you like your sister very much?

What is the advantage to your parents? You are still saying they will need to go into a care home if they deteriorate. It seems your main motivation is to extend your property. How much care will you be providing? I can see why your sister is upset. Essentially you are receiving a very large gift from your parents which she will not be getting.

I’m not sure how your parents are benefitting, unless they want to live with you particularly? Are you looking after them in any real way where it is necessary to live together? It’s not going to get easier living with them as they age - for any of you.
Re the POA that is your parents’ choice and decision to draw it up, but even after it is drawn up it is upto them as to if/when you step in and handle affairs for them.
The few hundred thousand they will have spare - it’s not clear how many hundreds but a generally quite basic care home, up north, will be around 50k per year; the rates for council funded of 505 up here, are just literally for council funded and when paying cost at least 750. Home care, should it be needed is capped at 434 per week currently where we are, but varies across councils. I imagine you’re further south and costs could be more. That would be an issue if their spare cash ran out as the council can and will look at deprivation of assets at any point in time.
Might they actually be better in a retirement complex near you instead? And they could gift you and your sister some money now, albeit it may be later counted under inheritance tax.

Please be careful about deprivation of assets. A care home may be needed in future if e.g. dementia raises its dreaded head. The council won’t care that you’ve done this for all the right reasons - to them you will have used a parent’s assets to make a valuable addition to your own home.

If there is not enough money left to pay care home fees, they can and will demand that you repay that money.

you will be hammered for deprivation of assets if they need care ….you will likely have to sell up to pay for it

I take it you hate your sister?🙄

Whatever if given to you, should also be given to your sister.

Don’t do this.

We wanted to with my dad but he ended up with dementia in a care home. Totally unexpected and
it went from him living independently and driving up and down motorways to being reliant on 24 hour care and under a DOLs order in the space of 8 months.

We would have been fucked under deprivation of assets.

Put this in legal section.

There's a few there that would know the facts

I disagree with equal split with sister, you are taking on more personal care as your parents age which she doesn't have to do your parents need to live somewhere.

No one knows what, if any inheritance will be left when people do pass. So that's irrelevant. You share what is left when the time comes.

As for legal implications regarding potential care. Get professional advice. I can't see there isn't a way of it not being a depletion of assets because what if your parents decided to sell up, rent, spend everything on cruises and then needed care? A free society can't trap people 7 years from an unspecified dare of death in a house not spending any money.

So ignore your sister, look online and/go to a solicitor for advice but mainly work towards what you all want to do.

You might want to have a read on the Elderly Parents board of the potential pitfalls of living with parents. It is not something I have ever considered but we knew someone who had their Grandad move in. It got really bad and he remembers his Mum practically chasing her Dad round the house as he refused to have his pants changed despite clearly having shit his pants, he was shouting that she was a liar and she was in tears. He said he wished he had never had to see the man he loved reduced to this shadow of his former self. Just because your parents are in good health now does not mean there won't be massive challenges and you need to consider how that will be dealt with. It usually falls to the daughter to do all the care. Could you wipe your Dad's arse? Bathe your Mum?