Complicated housing situation / deprivation of assets?

[Lemonlolly89]

Looking for some experiences and advice please (we are planning to get some proper legal and financial advice too but just for a bit of preliminary research).

It's sadly looking increasingly likely that my MIL is going to be diagnosed with dementia. She is living independently with a partner in his home and coping well for now but we are trying to plan proactively as best we can for an uncertain future.

My SIL now rents out the home MIL used to live in before moving in with her partner. Mortgage not yet paid off. Obviously this is an asset that would be assessed if she were to ever need social care in future.

Is there any kind of protection for a child (albeit a grown-up child!) living in the family home still in a situation like this? I understand there is for a spouse or partner but we're unclear on this.

SIL has suggested they look into putting the house into a trust, however I think this could fall under deprivation of assets. She's understandably anxious to make sure she can stay in her home. She is unlikely to be able to get a mortgage to buy the property (or another elsewhere) due to her financial situation and is quite resistant to the idea that she might ever have to rent elsewhere (for the same financial reasons she's quite unlikely to find anywhere decent for the same price).

It's a really tricky situation that I can imagine will only become more complicated so I'm just trying my best to support everyone by gathering facts. I'd rather MIL had this asset at her disposal in future to fund the best care possible if it ever comes to that - but nor do I want to see my SIL lose her home. I do think she needs to prepare herself for that eventuality though.

Grateful for any advice from anyone who's been in a similar situation. If you read this far, thank you.

How old is your sil

Perhaps the home needs to be sold to repay the mortgage. SIL will have to make her own arrangements?

I think the property can only be disregarded if a close relative over state pension age or is disabled lives there. Try Age Uk they are very knowledgeable on this area

This is kind of what I think and that she needs to prepare herself to stand on her own two feet, but I'm trying to remain a neutral outsider as much as possible!

Thank you, I have looked at some of their factsheets and they are really useful

Best to get legal advice as you are planning to. Trusts are very complicated, we're in the process of finalised by late father and mothers trust and probate. Its very, very complicated. Theirs was a lifetime trust, when Dad died the house was hers absolute but held in trust for me even though I was not living there. But it was hers for her lifetime so she could have moved back at anything as it was a discretionary will trust and a lifetime trust rolled into one.

The trust was made in 2001 and she didn't go into the care home until 2024 so clearly no deprivation of assets were associated with it as she didn't know she was going into care at the time.

Old enough to stand on her own two feet IMO (not a teenager or young adult anymore)... but that's a whole other story

Thank you - and I'm sorry for the loss of your mum and dad x

According to Age UK’s guidance, the house won’t be taken into account if it is occupied by a relative aged 60 or over.

They also say that the LA doesn’t have to, but can, take into account other people who don’t fit those categories.

It’s in their online guidance.

Thank you that is really helpful, I will look into that further

I'm not certain but I think there is a stipulation that it is the home owners primary dwelling. MIL does not live there, she is renting it to her daughter. This will probably make a difference to any disregard of property.

Also, once the idea of needing care is known it is nigh on impossible to ring fence any assets. A disregard will probably be the only route available.

Thank you, I'm jotting all this down as questions to ask when we get legal and financial advice. Appreciate you all taking the time to read and respond

As a PP said the property will not be disregarded as only a property the someone is residing in prior to care will be disregarded. In this case MIL is not living in the property she owns. You coukd apply for a discretionary disregard but in my experience this is unlikely to be offered. Putting the property in trust now potenial care needs are know if likely to be deprivation of assets. The council will ask a lots of questions about the trust if they are funding.

The mortgage lender is your first issue here. Is the lender aware SIL is living there and the borrower (MIL) is not?

I did wonder that myself. I think that would certainly apply if it was an additional investment property but she has no other property which she owns. She might need to start using the house as her official address just to reinforce that fact. Where she sleeps is nobody’s business.

Unfortunately the Local Authority will make it their business if there are attempts to circumvent self funding. It's how they roll.

Well SIL could have your MIL to live back in her old house and take care of her

I think she is just going to have to suck it up

Oh OP! I've just remembered! I'm sure there was a mechanism where the LA put a charge on the property. Deferred Payment Agreement. Have a Google.
If Power of Attorney is not set up before capacity is lost it will mean going down the Deputyship route. Try to get LPA set up asap.

This!
And who is currently paying the mortgage and how much equity is there?
Looking complicated, but first port of call would be looking at the mortgage. Then solicitors to get best advice.

There is the question of a contract between SIL and MIL for the rent ...

Does sil pay a market rent on it? If not and especially if it is put in a trust the trustees/poa have an obligation to maximise the asset to cover MIL care costs.

This is exactly where my line of thinking has led me really. Thank you for your input

I'm actually not entirely sure on this. I would hope they have done this but unsure if they will have even thought of it - I will raise it with them, thank you for pointing this out.

They're in the process of getting a tenancy agreement drawn up between them. MIL pays the mortgage (to best of my knowledge). I have no idea on equity or anything like that

Only if she's over 60 I think but not sure if that will still count as mil wasn't even living there.