Issues with potentially inheriting a house with someone else’s elderly parents in it

[Cathpot]

Need a list of ‘things we haven’t thought of’ with a slightly non standard situation.

Long time very lovely family friend who has no next of kin, has just asked if we would agree to be in their will to inherit the house their parents currently live in.

Parents are living independently day to day but not coping with wider aspects of life and friend has power of attorney and owns the house they live in, having bought it for them.

Friend wants some one they can trust to own the house so that parents can continue to live there if they died before their parents.

Friend lives abroad in partner’s country of origin and the rest of their estate would go to their partner.

Although our friend -who is healthy and mid 40s- is very unlikely to predecease the parents, ( and may well be married and/ or have children in the next few years which would change the situation) , I can’t help thinking we need to consider any unforeseen consequences before saying yes.

Things to think about so far

• What happens if the house needs repairing , who pays for that?
• What happens if their parents need to move into care, who decides that and what if they resist?
• if parents moved into care or died, what does friend then want done with the money from selling the property.

We feel that friend just needs peace of mind to know someone who has known their family all their life and would do the right thing for their parents, has been named in the will should something unexpected happen. We would like to help but don’t want to say yes without making sure everyone has considered all the consequences , however unlikely the chances of this happening.

Friend really has no hidden motives! Their parents don’t have capacity to deal with the house themselves
I don't understand this? Why would the change of ownership from her to you render them any more capable? What's wrong with them anyway?!

Surely you'd have a big capital gains tax bill from a house you've never lived in? As a PP said, having a second property may increase your stamp duty if you ever want to move or relocate?

It sounds like a tie that you don't need, although a house sounds like a generous bequest it comes with so many ties in this instance that I would be wary!

Couldn't your friend leave the house in trust to her parents, with the Trust to be administered by a solicitor?
That might be easier on all concerned.

If you're in your friends will, you would inherit the property when your friend dies, not when the parents die.
So if they get old and infirm, need care, then die, your friend would still own the property, potentially for decades. Plus she could change her will at any point.
As PP says, she should gift the house to her parents and have you named in the parents will.

Or, you could be the trustees and have a solicitor to manage it with you chipping in on decisions when necessary.
www.bbc-law.co.uk/legal-news/managing-trusts/

Thank you notverygrownup that’s useful information. You are right it is all about peace of mind, friend has moved abroad, parents are starting to lose faculties, hence the power of attorney. It is not an easy situation and this request has come out of a place of caring and before legal advice and clearly won’t work without a rethink. Thank you again for the posts, very useful input.

This is a complicated suggestion by the friend and hard to understand why anyone would do this. As @Notverygrownup says the property should be left to the parents. If the friend predeceased her parents and you became owner there is no legal protection for the parents and you could dispose of the property as you saw fit.

When did your friend purchase her parents house? Social services can trawl back through all of the finances if they believe it was done to avoid paying care fees. Seems an odd thing to do.

Ah so she doesn’t want to leave it to her parents If she should die because then the house could be used to fund their care.

Did your friend buy this house using money gifted from the parents?

It seems dodgy to me.

What if you and your DH split up?

What if you suddenly owe lots of money - say, if you caused an accident by negligence and were sued?

What if you needed somewhere to stay for a few months - would her parents have the right to stop you moving in and living there, if you own it?

@Coffeeandbeans

When did your friend purchase her parents house? Social services can trawl back through all of the finances if they believe it was done to avoid paying care fees. Seems an odd thing to do.

exactly what i was thinking, it's called alienation of assets. they can go back many years, decades. and do. it's nothing to do with IHT, that is 7 years.

@Coffeeandbeans

Ah so she doesn’t want to leave it to her parents If she should die because then the house could be used to fund their care.

Did your friend buy this house using money gifted from the parents?

It seems dodgy to me.

the whole thing sounds dodgy. maybe you are a little naive about friend. if the parents lack capacity, who is actually going to look after them, and make decisions for them. they cannot safely live alone in such a state. health/ ss would soon become aware and intervene. it is a real minefield dealings with these officials even with one's own family. have you any experience of this. and it is madness to suggest making a will involving real estate without a solicitor.
i think you need to steer clear. friend is either up to something, or so dopey as to cause big problems. for you. there are legal issues, also financial, safeguarding, welfare, health etc.

A solicitor should be able to sort this easily with a trust or life interest in the house in favour of the parents.

As @Notverygrownup says the property should be left to the parents

This is a bad idea if they want to avoid IHT.

He should leave it in trust (with maintenance monies as well) for the use of his parents and then when they decease have a wish for its distribution e.g. to you or to other family etc

Could the OP clear something up please? People are talking about 'claw back', but I got the impression that the friend bought a house FOR her parents, not FROM her parents. So it's not currently, and never has been, an asset of the parents.

Hi , yes house was bought for the parents not from them.

In what way do they lack capacity?

but where did the money to buy the house come from.
where were the parents living before.

Technically you would own a house with tenants. You’d be responsible for maintenance and upkeep, and you’d probably have to pay income tax (calculated on the amount you’d be receiving if they were paying rent at the market rate - the fact they’re not actually paying that rent is irrelevant).

Good long chat this evening with friend. New plan- house will be left in will to their parents to be sold and used to pay for the care they would then need. Friend will take legal advice to ensure that this can all be set up to run as smoothly as possible. Thoughts and advice on this thread were so useful in getting to a practical solution.

That sounds like a much better plan OP.
Another thing not considered here was the potential for DWP issues. If you ever needed to claim benefits, if you got sick or lost your job, owning another house might've caused problems.

Why wouldn’t she leave the house to her parents. Alternatively she could put the house in a trust and ask you to be designated as the trust executor in the event of her death. Leaving you the house directly is just a bad idea.

I still think a Trust would be preferable—owning the house might disqualify your friend's parents from receiving state help should they need it, and the proceeds from the sale of the house might not cover all their costs if they live to a very ripe old age.
Just my two cents.

@biddybird

I still think a Trust would be preferable—owning the house might disqualify your friend's parents from receiving state help should they need it, and the proceeds from the sale of the house might not cover all their costs if they live to a very ripe old age. Just my two cents.

but that is the reality for many people. if they need residential care, both of them, then the house is sold and money used for that. if when it runs out they become dependent on public funds, same as people who had no assets to sell/ use in the first place. if only one spouse needs care, the other cannot be put out of the house. OP; is there something about yr friend's health that she is not telling you. does she not expect to outlive her parents.