Elderly Parent Gifting House

[LouOver]

Hi

Please could I ask for some advice on how the following could work.

Single Mother owns a house valued at a minimum of £450K (worse case scenario) - current mortgage owed is £67K

Mother final pension likely to be around £23k and looking to retire in the next 12 months. Is not in great health (relevant) and is reaching retirement age in exactly 12 months time and will not be able to afford upkeep on home.

Son is financially secure, currently building his dream house and is on a 6 figure salary but wants to eventually step down into a more manageable role (age 34)

Daughter also financially secure but not to the same level however will continue to rise and has possibility to reach in line with above (age 36)

Daughter is about to sell house with husband to up size.

Family home owned by Mother is exactly whats needed and also has a detached double garage with available land that could turn into a Granny Annexe for as long as Mother needs it. Estimated renovations to house and annexe would be £100K

Daughter and Son In Law have roughly £150k in equity from current house.

This is not an inheritance grab, all members of the family are on board with the above happening but insistent on inheritance being a 50% split.

How can this be fairly done?

The fairest way would be for DD and SIL to buy the house from DM at independently assessed market value (with mortgage), and DM buys a small place elsewhere, unless you can legally split the title so the annexe is a separate property which in due course can be sold separately.

You don't want to have DS having a claim on part of DD's house, or an issue with deprivation of assets against future care costs.

Speak to a solicitor about both the arrangement and tax.

Logically daughter and husband are buying a share of the property in exchange for building and the ownership needs to reflect that. Subsequently when Mum dies you need to either sell it or buy brother out. If Mum goes into care the local authority may put a charge on her share of the property and ultimately it has to be sold. Are you OK with all the costs and possible timings of those?

What happens if daughter or her husband dies before Mum? What happens if either suffer financial problems or they divorce? What happens if everyone falls out sufficiently to want to sell up? Mum ends up worse off.

Why does Mum get the granny annexe when daughter puts in a small share but gets the bigger property? I appreciate it may well be pure numbers in either property.

Are you all really, really sure about living together?

Original plan is mum downsizes has equity release once paying off mortgage and then manages finances on pension.

DD also happy to buy own upsized house for family and everyone lives separately (I am DD)

However mums health is in bad shape and she is extremely anxious that she doesn't believe she can live on her own and have enough to live on. Whilst I don't think she has fully grasped that she is in a better financial situation than most the health matter I am concerned about.

I think multi generational living is a good thing but it needs to be a separate annexe for everyone's sanity.

I would get the bigger house based on having children that need the rooms and that I'm accepting care responsibilities at some point in the next decade. The aim is to avoid a care home situation however protecting what would become my families home from that eventuality.

DB just doesn't want to be excluded from inheritance.

Would you be able to raise the money to give your brother half the value?

Pension 23k plus state pension 11k or 23k all in?

Probably better to buy independently but near each other.

Work out costings for developing/renovating annex. I'd say your mum should pay for that -will benefit you somewhat but you won't get any remuneration for the burden you are taking on. Then work out what equity she's effectively left with & go from there for splitting as inheritance, (but get valuation for property transfer before annex completed in case of IHT issues)

Can daughter buy the house at market price and then rent the annex back to mum? Mum gets a chunk of cash from the sale that she can invest in income generating funds and potentially a care home if needed in future.

Daughter owns the house free and clear. Mum's chunk of cash will one day be the inheritance and can easily be split equally as needed.