Sort of inheritance one

[DrBlackbird]

Parent in care home. Sibling in 50’s wants to sell own home and move into parental home, which is currently sitting empty, to save on mortgage payments. Sibling is single and on NMW and financially stressed. Though quite a bit is due to their financial choices/mismanagement, love for luxury holidays etc.

Putting a lot of pressure on us to make this happen. Quite an emotionally driven person. Not v flexible or reasonable. Sibling has form being v v forthright in advancing a personal agenda and cutting off contact if displeased. Our DCs are v close so I suppose I’ve tried to ensure that this doesn’t happen.

Has this scenario happened to anyone else? What were the outcomes? On the one hand, the house is sitting empty and it could save the sibling a lot of stress. On the other hand, what happens when parent runs out of savings to fund care? Apparently it’s up to each council to decide/allow the adult child to remain living in the house. Anyone have any experience of this?

If the house doesn’t need to be sold, then that’s another story of what happens once the parent passes and the other recipients want their share.

Interested to hear of anyone else’s similar’ish experiences.

You're depriving your parent of assets if you do this; you can't give away their house (as in not charge rent) because that's not in their interests.

You are also hiding assets in terms of their care home fees. I'm sorry for your sibling in some ways because no doubt getting some of their inheritance in some ways could help them, but if a parent is in a care home their isn't going to be an inheritance at all...

It's not up to the council, they have to follow the care act. Usually a deferred payment plan is set up, as described in the act. The property remains that of the parent until they die and anyone can live in it as they please, then the plan must be paid off in 90 days.

If it is the private residence of a child over 60 (may be 65?) or registered disabled then it is automatically disregarded and cannot be used to fund care, on the death of the parent it passes according to the will.

Not sure if this is appropriate

https://www.gov.uk/government/publications/giving-gifts/giving-gifts-web-version

What can’t be given as a gift
The law says you must not make gifts from the person’s estate (their property and money), unless they are permitted by section 12(2) of the MCA.
Only the Court of Protection can authorise payments that fall outside of section 12 of the Act. Some examples where a court application is likely to be needed include:

• making a loan from the person’s funds
• making a large gift
• creating a trust of the person’s property
• living rent free in a property owned by the person

Could your sibling live in your parents house and rent their own house out to pay their mortgage? That way you are helping them, your parents house is being maintained and its not your sibling's only home in the event of your parent passing.

Not caring rent is not deprivation of assets as rent is not an asset. There can be sound reasons for a non rent paying person to be in the house, for example by being there they are keeping the property in good repair or improving it ready for eventual sale, and will move out promptly (one hopes), no need to give a tennant notice.

That would be perfectly legitimate.

If sibling wants to avoid mortgage repayment, I’m assuming they want to sell their current house.

Are they planning to use that pot of saving to live on it and pay for said luxurious hols?
What is their plan if you need to sell the house to pay for the care home? Or once your parent has died and you BOTH inherit the house (I imagine)

"Advice is a bit vague and mentions discretion."

Yes, councils do have discretion. But I really don't think that your sibling will come under the typical sort of heading that they might consider (sorry, if that seems harsh).

Examples of where councils might choose to exercise their discretion include eg your sibling had moved into parent's home (and sold their own home) to act as their carer before the parent went into a care home. I would think it very unlikely that the sibling would be expected to move out in that case.

Alternatively, if the sibling had been homeless or in very substandard, or overcrowded, rented accommodation then the council may accept that them moving into the parent's home might just be acceptable.

But for them to think about selling up their existing home and moving in to the parent's home that really will look as though you are simply trying to avoid paying the care home fees.

I have not RTWT but I am a former mental capacity solicitor. You cannot simply allow sibling to live in the house rent free. As you noted, as POA with DP lacking capacity, you have to act in DP's best interests.

Seriously, please trust me on this, I have seen many people end up in court thinking they could just do whatever they wanted with DP's money.

Seek legal advice from a firm with experience in this area about what is in your DP's best interests re the house.

Your sister is incorrect. in order for the disregard to apply she would have to have been living there before mother went into care home. She’d also have to be over 60, under 18 or have a disability that rendered her vulnerable.

www.ageuk.org.uk/siteassets/documents/factsheets/fs38_property_and_paying_for_residential_care_fcs.pdf

i think this would lead to resentment from other siblings, unless person in question was destitute. They’ll basically live rent/mortgage free, and get to spend all their lovely cash from their house sale on holidays, clothing etc.

Have they formulated a schedule on what work needs doing, coatings, timing etc? We’ve all moved into a house and planned to replace the kitchen, bathroom etc, and end up living with the same bones for fifteen years. And who decides what work is needed, design, quality of materials etc - the sibling all family as a whole?

Who has Financial PoA?

Not caring rent is not deprivation of assets as rent is not an asset. There can be sound reasons for a non rent paying person to be in the house, for example by being there they are keeping the property in good repair or improving it ready for eventual sale, and will move out promptly (one hopes), no need to give a tenant notice.

^ Does this argument have any merit?

Sib can’t/won’t move into DPs house without renovations (it does desperately need updating) so it has to be a) DP sells house and b) moves into DPs house. Then won’t be able to afford paying any rent to DP but would keep property and improve it. That’d be the plan.

If your mums house is rented out the income is most definitely her income - if you are POA I cannot see that you would be acting in your mums best interests (which is the primary role of POA) to give away that income to your sibling. Even if you did, this would be classed as a gift and therefore subject to IHT rules.

The attached information sheet from Age UK is very clear in this matter - see para 5.3 about disregarding the property. It will NOT be disregarded if someone who otherwise would mean the house could be disregarded moves into the property after the person has moved into care.
https://www.ageuk.org.uk/siteassets/documents/factsheets/fs38_property_and_paying_for_residential_care_fcs.pdf

Unless you all want to say goodbye to your inheritance, and possibly be stung with care fees, then it is a terrible idea. The house should be sold as it is and the money invested for the future - either paying care fees or later divided amongst will beneficiaries. The only option for sibling would be to buy the property.
Allowing sibling to move in in any other circumstances is just storing up problems for the rest of you in future.
Since you have POA you can sell the house now, no point delaying.

That’s a helpful guide. It does say:

If a relative moves into your property after you enter a care home, the guidance tells authorities to consider all relevant factors about why this has happened. They have discretion to disregard the value of property to avoid the risk of certain people becoming homeless... However, discretion should not be exercised if the move is solely to protect a family inheritance.

Which it wouldn’t be. This is what the sibling is relying on quite heavily. Though obviously still a high risk.

She would only be homeless for example because she’d sold her own property so woukd have made herself homeless

local authorities are seriously financially screwed. It would be really really incredibly risky for her to rely on this possible disregard

@Soontobe60 i read that para as saying that local council could disregard DPs property if it meant that sibling could become homeless. How they determine it’s not solely to protect inheritance is the question.

Edited to add yes it would be incredibly high risk. As long as there was enough inheritance left, they could downsize to buy a smaller place.

Frankly no, it does not have merit in this scenario.

Come on OP! Read back what you have written.

Sibling is single and on NMW and financially stressed. Though quite a bit is due to their financial choices/mismanagement, love for luxury holidays etc.

Putting a lot of pressure on us to make this happen. Quite an emotionally driven person. Not v flexible or reasonable. Sibling has form being v v forthright in advancing a personal agenda and cutting off contact if displeased

I would also add that leaving the house to sit empty right now is also probably not in parent's best interests either.

You need legal advice. I would seek this now, and when they advise you you can then pass this on to sibling.

How much money will she get from selling her house? If she’s on nmw, can she afford the renovations?

If your sister was reasonable it could be a good idea for her to live in the property, paying the heating and council tax etc and doing any small repairs needed, until your parent or their representatives arranged for the house to be sold or rented out.
If she's not reasonable though and might not move out when asked, it could turn into a disaster. Your parent or their representative needs to decide what will benefit them, not another relative, and make it happen.

I really hope you're not actually considering letting your sibling do this. It's a recipe for disaster

I guess I meant legal merit @Honestlyhonee in terms of justifying not paying rent.

But yes, bottom line seems there’s a need for legal advice.

Edited to add that it also rests on sibling being reasonable and following through on agreements made upfront. I’m not so sure about that.

In theory maybe but having seen cases like that in court it never seems to end well. Best interests is not black and white but ultimately this scenario screams that your sibling is trying to live rent free for their own benefit.

I would avoid letting them move in rent or buy the house unless you have sound legal advice as I think it will cause problems and potentially cost you your inheritance

I unfortunately speak from experience with a financially irresponsible not on nmw but make's stupid decisions dsis family and loyalty means nothing when there is money involved