Elderly grandmother's house

[Ayeayeaye]

Hi,

Just wondered if anyone could give advice here.

This is about my grandmother who is in her late 90s, still doing well lives in her own house, gets out and about etc. Everyone who meets her says she's amazing and she totally is, we all love her.

This is to do with her house, specifically what she needs to do to ensure that her family would get her house in the event of her passing, and not the government (I don't know all the ins and outs of this but I remember it being mentioned years ago and my mother has mentioned it another couple of times recently.)

Basically a friend/neighbour told her years ago that she knew someone who had signed over the house to her family and the family ended up kicking her out of the house... I don't know all the details but it was basically "elderly person did this for her family and family ended up betraying her and stealing her house".
I mean it might not even have happened or details might have been murky but this is what she was told and believed.

So basically this was on my grandmother's mind and she refused to go and sign paper work so that the house would pass to the family when she dies, all because of what her friend told her! This was years ago that my mother had discussed this with her and because she's so old now and my grandmother had said ok lets sign the papers but the time has passed and it's too late for anything to be done my mum said and the house will go to the government instead of her family after she passes away.

Is there a way around this does anyone know?

Even if she signs it over and goes into care several years down the line, if it’s proven she did it to avoid paying care bills etc then it’s a criminal offence. By the sounds of it, what you are asking is how to commit a crime to avoid paying potential care fees etc so it would probably be relatively easy to prove.

Unlike inheritance tax, deprivation of capital doesn’t have a seven year cut off with regards to accountability of assets.

Your grandmother would be committing fraud and so would those who help her especially if they benefit from it. Why should she avoid paying for her care? Also, have you seen the difference between some care homes and what those you pay for can have compared to those you don’t?

It's as if you've never heard of a will.

Don’t forget as well, if your gran needs to go onto care and is self-funding (using the money she’s built up in her property over her life), she has the pick of them all and can go into a really nice care home that will look after her and she’ll be comfortable and happy.

If she has no money available, she’ll be left to the whims of the local elderly social services department which will dump her on the cheapest one available.

How do you want your wonderful Grandmother to spend the last year or two of her life? Getting out and about with a rounded social calendar and great food, or stuck in a lounge 18 hours a day on basic rations?!

There are two main reasons why an elderly person might sign their home over to relatives during their life time

1. to reduce / avoid an inheritance tax bill on her death.
2. to avoid her home being sold to pay for care home fees.
3. inheritance tax

With regard to Inheritance tax it is only relevant if her total assets / estate are worth more than £325k. Anything below that is not subject to tax

Her tax free allowance could be increased by up to a further £175k to £500k in respect of the value of her residence (if the residence is being left to children grandchildren) and /or would be further increased if she had a husband who is deceased and had left everything to her.

In summary inheritance tax will not be an issue if her estate is less than c£325k -£500k depending on house value (or even more than £500k depending on husband).

If it IS payable, it’s payable at 40% on any value in excess of her nil rate allowance (which is at least £325k and probably more). So if she had a house worth 100k and her total estate was worth £450k there would be allowance of £425k and so tax due of £10k - being 40% of £25k

1. care home fees

if your gran needed residential care and had no other assets, her home would have to be sold to pay the fees. People often transfer homes to their family member to avoid this BUT if the transfer happens within 7 years of the person needing care it is effectively deemed to not have happened and the house still needs to be sold. So while I hope your gran lives many more healthy years not needing a care home, in effect it may be too late to transfer the home for this purpose given her age

finally
if your gran dies while not having needed a care home, her home / estate will pass to whoever is stipulated in her will.
If she has no will the estate will go to her next of kin - determined in the general order of spouse, children, grandchildren. So if she has no spouse but two sons it would be split equally between them. No sons or daughters would mean split between grandchildren.
Her home / estate can only pass to the crown in this case if there are no living relatives - and that’s clearly not relevant here

Hope that helps

My mum looked after her for a week or so last year after she had a fall and her confidence was destroyed. But my mum struggled a lot. She's one of those very independent old ladies and I just couldn't see her taking to carers at all, or accepting going in a home unless she lost her mental faculties (and she's sharp as a tack). Until the last year or so she's never seen herself as being old (and would get a buzz when people guessed she was in her 70s or something). I think it would be a case of her going kicking and screaming unless she was severely incapacitated. Which would be very sad.

Thanks so much for this.

There is no seven year rule for deprivation of assets and Councils can go back as far as they wish.

whilst its to be hoped she doesnt have another fall , it might get to where she has to have carers in , and i honestly dont think anyone unless they are really far gone with demetia wants to go into a care home , id rather die a bit younger than reach that stage , however again i do think old people are so selfish and iv read this so many times on mumsnet , they would rather see their children or relatives half dead struggling to care for them because they wont accept carers coming in .
theres no way i would expect my dd to be slogging about caring for me unless it really was just bringing in the odd bit of shopping now and then when i get old

Absolutely. Anyone with assets is required to use those if necessary to pay for the costs of care.

There were some schemes which claimed to avoid these, by transferring ownership of for example, a property to the next generation.

These have a number of serious flaws so have now fallen out of use.

PP have pointed out that it only works if the person staying in the house pays a market rent to do so, once the ownership is transferred. If this doesn't happen, the transfer can be ignored when assessing assets.

Another issue was the risk that in the event of a marriage/divorce on the person getting ownership, half the value could be lost as part of the divorce settlement.

and I just couldn't see her taking to carers at all,

I couldn't ever imagine my mother accepting care never mind living in a care home, either

I'm sorry to mention this while your grandmother is still well and capable. I do this incase it helps you be prepared for what might come later.

For the last six months of my mother's life, however, she was bed bound. It took two people to safely lift her. It just wasn't possible to arrange that type of care outside a care home setting.

We were lucky that her cognitive decline kept pace with the break down of her body, so she slept most of the time. Would occasionally wake up to say hello and smile then go back to sleep. I like to think she enjoyed the dreams.

Op I think in her 90s it's probably too late to dodge the care home fees. But the house will go to the generation above you.

And while many are horrified at people trying to dodge care home fees I'm on the logic it should fall under NHS rather than be privately funded anyway.

The very rich in the UK do all sorts of things to dodge paying UK tax I really don't see why ordinary families should have to pay care fees.

This in spades.
When my mother needed residential care, she had to self fund.
My sister and I spent a week visiting a dozen care homes in her area and struck gold when we found the one where she ended up spending the final 4 years of her life.
Several of those we visited, I would have HATED her to be in. Self funding gave us that choice.

Her apartment was sold with her consent and the money never ran out.

I think the OP wants the house signed over before death in order to avoid IHT & care fees?

Separate your thoughts between what would happen to her property if she were to need a care home Vs if she dies. They are very different scenarios.

The will only comes into play on death.

well in an ideal world i guess ordinary families shouldnt have to pay them , but then lets look at the general crapness of the nhs and put even more strain upon it by foisting upon it the care of thousands of old people many with assets they could use to pay . the nhs does not work well as it is without care homes being added into the mix its got to cover

only be reforming the nhs and devising some sort of scheme whereby we all pay into to cover eventuall care home fees will it be the case where elderly people dont have to sell their houses to pay for the fees

as it is at the moment with the general strain upon things it smacks of entitlement to me to try dodge paying your fees because the relatives want their inhiertance ,and lets face it thats what its about at the end of the day , the families want someone else to pay for thousands of pounds worth of care and it should be the state , they just dont want it coming out of the windfall thats their dear old mums house

If she needs a carehome or carers then she would have a financial assessment to see how much money she has and how much she would need to pay. Any cash would be used first and if that ran out then the house would need to be sold or deferred and sold when she dies. The money is for the carehome not the government.
If she makes a Will stating that the all her money, house, belongoings go to xxxx in the family then that will happen once any debts or care fees are paid.
You say its a small family but if she wants and is able to leave the house then who would it go to? Would one person inherit it, everyone get a share of it, people buy each other out. What if the person who inherits it doesnt want it, would they sell it, give the proceeds to other family members.
She should make a Will stating exactly what she wants and appoint an Executor, if not then she will die intestate and anything she has left will be distributed as intestacy rules apply.

I think you should, for your own peace of mind, ask whoever it was that tried to get your grandmother to sign ‘this paperwork that would prevent the government from getting her house’ what it was.

Because it is clear from your OP that someone tried to get her to sign something, and someone described to to you as ‘paperwork that would prevent the government getting her house’.

And as lots of people are saying, that sounds a very odd way to describe what it could be.

if it was a will, then IMO everyone should have one, but a will is quite straightforward to describe and also, should only have in it what the person making it wants.

If it was something else (signing over the ownership of the house) then it is quite possible it doesn’t achieve what someone thinks it does.

if you can find out, and explain it on here you can get more help.

@TheSnowyOwl ”There is no seven year rule for deprivation of assets and Councils can go back as far as they wish”

Agreed @TheSnowyOwl - sorry you are quite right. I meant to go back and clarify on this. There is no legal limit and of course you’re quite right that they can go back as far as they wish.

in some areas (including mine) they use an arbitrary guide of 7 years - in that they will definitely go back if it’s within that. In many areas and in various circumstances, they will go back long before that.

I used the definite 7 years for OP as an indicator that realistically, given her gran’s age, it’s likely too late to do anything on this now as it’s always a minimum of 7 years. But I meant to change this before posting as I realised afterwards that other people may also be reading / relying on this

Thanks for the correction

OP you really should get specialist expert advice. Your Grandma can benefit from free personal care in Scotland which might meet some of her care needs in future.

Ultimately though having an asset like a home means the family will have more choice when choosing long term care if this is needed.

Choice is a good thing.

There's no inheritance coming my way ever but if any of my relatives had any sort of money/assets I'd be telling them to make their life as great as it can be.

Everyone needs a WILL - your grandmother and your parents because regardless of their wishes everything will be much easier to sort out if there is a will. You should also look into power of attorney both health and financial in case she has a stroke/dementia and becomes incapable of making decisions.

It does sound bad. If she needs to go into a care home why should every tax payer have to pay for it so that your family can keep the house? Also if she needs a care home why shouldn't she have the money to pay for the nicest home she can find rather than going into one the council will pay minimum for?

OP:
Your grandmother needs to make a will. This can be very simple, just saying she would like her estate to go to…. But done legally.

If she needs to go into a care home and has no savings to pay, her house can be sold to pay. The Gvt don’t ‘take it’, and any money left over still goes to her family as stated in her will.

As she is already of advanced age and still independent, the chances are that if she does need care it won’t be for long.

The 7 years thing is to do with Inheritance Tax, not assets re care home fees. And you don’t pay Inheritance Tax on anything up to £375k, or £500k if the estate includes a main home left to direct descendants.

In England, for care home fees, technically they can’t come for you if you give away your assets before the need for care, or the condition that precipitates the need for care is known. But being in your late 90s probably counts!

This might be a good moment to get your parents to think about getting a will.

There is also the very real possibility that your granny won't need residential care at all. She's already a very elderly lady and without putting too fine a point on it, any illness or accident could see her pass away very quickly. That's what happened to my granny, similar age also Scotland. She was diagnosed with pneumonia by her GP, admitted to hospital, died 10 days later. Never went home, never went into residential care.

If there is no will then there's a flow chart which helps you work out who inherits in Scotland.
www.thegazette.co.uk/wills-and-probate/content/103535
You may have to zoom in to see it.

Assuming your granny does not have a living husband, then the estate, including the value of her property, is split evenly between her children. If one of her children has died, then their share is split between that person's children - so for example if there are three children called Ann, Brenda and Carol, but Carol has died, Carol's third of the estate gets split between Carol's children, however many of them there are.

If your grandmother goes into care, her care home fees will come from her assets which will include her house.

If she dies without needing care her estate will be distributed in accordance with her will or, if she does not have a will, according to intestacy rules (usually divided between children). Inheritance tax is payable if the estate exceeds 325k (double if she was married and her husband has already died) but there is a main residence allowance of £175k (on estates worth less than £2m) which takes the tax free amount to 500k (again double if married) if she is leaving a family home to her children or grandchildren

She cannot transfer ownership of her home in order to avoid care home fees. That is deprivation of assets and the Local Authority will pursue the new owners for care home fees.

If she is wealthy enough to meet care fees from other income she can sign the family home over to family before her death. If she survives for seven years that gift would be IHT free. But she can not continue to live in the property after the transfer unless she pays the new owners market rate rent (taxable) until her death.

I'll mention the will thing to my mum, not sure if my grandmother has one already or what. My granddad died years ago and mum is their only child. Thanks for the info, I have no idea about financial matters (and really need to sort out a will for myself, not that I'm loaded!). I guess once things are sorted then that's one less thing to worry about.