Probate/Estate planning question 09:09 - Jan 27 with 3494 views | StreathamRanger | Morning all. I'm in the process of seeking professional financial advice but I thought, seeing as how there are so many great minds on here, someone might be able to help with a question my sisters and I have about our parents estate. My dad died last February. My parents were separated but not divorced and they remained close friends so he left his pension, property and assets to my mum when he died. We are nearly through probate for my dad's estate so my mum will soon own his house as well as hers. Unfortunately, we had to move her into a care home in May as she has Dementia and was no longer safe living on her own. Care costs are around £100k per year so we were working on the assumption that renting both would be the best option to help cover the cost of care. My mum's house is already rented out so my first question would be, if we are renting my mum's house to pay towards her care, would it no longer qualify as her main residence after she dies? If she has no main residence then we could potentially miss out on the additional inheritance tax threshold for passing on a main residence. Following on from that, any thoughts/opinions on selling both houses and putting money into AIM shares in the hope that she lives at least two more years and then money invested in shares becomes IHT free? It's all quite complex and we're just trying to figure out the best course of action. As I said, we are in the process of getting professional advice but it would be good to know if anyone has experienced similar scenarios or has any knowledge in this area of tax/estate planning. Thanks | ![](/images/avatars/0.gif) | | | ![](/images/icons/ignore-user.png) |
Probate/Estate planning question on 09:21 - Jan 27 with 3437 views | BostonR | I would seek financial advice asap. Not sure where you are based but I have had some complex financial issues over the past 24 months and have used http://www.moneyexplained.com/ whom I found to be very professional and discreet. | ![](/images/avatars/5402.gif) | | ![](/images/icons/ignore-user.png) |
Probate/Estate planning question on 09:24 - Jan 27 with 3418 views | StreathamRanger | Thanks Boston. We are definitely going to be speaking to a professional, hopefully very soon. So far we've just tried to focus our decisions on raising as much money as possible to pay towards care home but in doing this we may have tied ourselves in a few knots. Need someone to help unravel it all for us. | ![](/images/avatars/0.gif) | | ![](/images/icons/ignore-user.png) |
Probate/Estate planning question on 12:06 - Jan 27 with 3190 views | mcqpr10 | I think that the retirement home counts as her residence and you have three years to sell her property before having to pay capital gains tax on it although no expert on this! | ![](/images/avatars/0.gif) | | ![](/images/icons/ignore-user.png) |
Probate/Estate planning question on 13:16 - Jan 27 with 3080 views | kensalriser | Sorry to hear about your mum. I've been through a very similar experience with my parents (they weren't separated but I don't think that makes any difference here for tax purposes). Your mother will inherit your father's IHT allowance and the Residential Nil Rate band for properties, which essentially provides a tax free allowance of up to £1 million when she dies, providing the property is left to direct descendants. Your mum's house will be a qualifying property providing it was her main residence before she went into a care home. Personally I wouldn't touch the AIM option with a bargepole, that looks very high risk especially if your mother needs to live two more years (do you want that kind of stress over and above that of coping with seeing your parent decline with dementia?). Renting the properties is very safe and predictable, it will create an income alongside any capital appreciation as well as preserving the IHT allowance. The government advice is here: https://www.gov.uk/guidance/check-if-you-can-get-an-additional-inheritance-tax-t If you consult a probate and wills specialist, read up and be as specific as you can with both your questions and the information you provide. I did this and was surprised it cost only a couple of hundred quid. | ![](/images/avatars/3082.gif) |
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Probate/Estate planning question on 15:24 - Jan 27 with 2916 views | W12Mikey | Sorry to hear you’re going through all this. You should absolutely take proper professional advice because anything you read on the Internet or from this forum is not advice that is tailored to your particular circumstances. That said, some points to consider: - the nil rate band for a main residence tapers off if the estate is worth over £2m in total at a rate of £1 for every £2, so if the estate is over £2.35m the main residence is irrelevant. Obviously it is also irrelevant if the estate is under the amount of the nil rate band (up to £650k) - your mother’s estate will benefit from her nil rate band (£325k) plus any unused amount from your father’s, so potentially £650k, but less if your father made any bequests that used some of his nil rate band - your planning needs to take account of the fact that you can’t know for sure how much your mum will be spending on the care home and therefore how much the estate will be - your mum will be liable for income tax on net rent received from the properties, plus someone will have the trouble of managing them. If it were me I would seriously look at selling at least the one that was not her main residence and investing in something more liquid to generate the cash to pay for the care home. You could get a 4% plus after tax yield by investing in shortdated gilts (get ones with a low interest rate which sell at a discount to par because the capital gain on gilts is tax free) - AIM shares are a possibility but as a previous poster pointed out are pretty volatile. I know someone who put some of her estate into AIM shares between 2019 and 2021. Overall, she is slightly ahead because of the 40% saving in IHT but they have gone down in value quite substantially (and most of them don’t generate much income). Note that HMRC will not tell you in advance which specific shares qualify for the relief. Also, what if your mum does not live for 2 years or what if the legislation changes? Obviously there is only any point in taking this risk with the portion of the assets which would otherwise be liable to IHT . - it is not too late, if all the beneficiaries agree, to vary the terms of your dad’s will ( the deadline is 2 years from death) if that had any tax benefit e,g, to use the main residence relief for his house Conclusion - it’s complicated so get that professional advice, | ![](/images/avatars/0.gif) | | ![](/images/icons/ignore-user.png) |
Probate/Estate planning question on 16:39 - Jan 27 with 2813 views | suffolkingfedup | I know how you're feeling being in a similar situation so i would like to add some things to think about. I won't go into the emotional side of this so it is just the hard financial decisions i have made. My Dad, 80 , single, went in to a home 18 months ago with dementia so i had to sell his house to pay for the care (£82k per year in our case). I'm taking out an annuity to cover his care fees after the bit of income he has. There is no tax to pay on the income from an annuity, there will be on most other investments. Once his future needs are covered by the annuity some will be going into AIM stocks which are riskier than a lot of investments but at the moment they are very cheap having had a terrible run. They are a gamble, but every decision you take here is a gamble on life expectancy & market movements. For anybody not in this situation but may be in the not too distant future, give your power of attorney to somebody you trust or try to get your parents to give you their POA...dealing with dementia is hard enough without having to deal with the court of protection | ![](/images/avatars/0.gif) | | ![](/images/icons/ignore-user.png) |
Probate/Estate planning question on 16:53 - Jan 27 with 2779 views | StreathamRanger | Thanks everyone for your advice on this. I'm always amazed at the kindness of strangers on here. Makes me proud to be an R. Lots to think about and your thoughtful responses will definitely give me some questions to take with me when I speak to a professional. | ![](/images/avatars/0.gif) | | ![](/images/icons/ignore-user.png) |
Probate/Estate planning question on 17:01 - Jan 27 with 2769 views | StreathamRanger |
Probate/Estate planning question on 16:39 - Jan 27 by suffolkingfedup | I know how you're feeling being in a similar situation so i would like to add some things to think about. I won't go into the emotional side of this so it is just the hard financial decisions i have made. My Dad, 80 , single, went in to a home 18 months ago with dementia so i had to sell his house to pay for the care (£82k per year in our case). I'm taking out an annuity to cover his care fees after the bit of income he has. There is no tax to pay on the income from an annuity, there will be on most other investments. Once his future needs are covered by the annuity some will be going into AIM stocks which are riskier than a lot of investments but at the moment they are very cheap having had a terrible run. They are a gamble, but every decision you take here is a gamble on life expectancy & market movements. For anybody not in this situation but may be in the not too distant future, give your power of attorney to somebody you trust or try to get your parents to give you their POA...dealing with dementia is hard enough without having to deal with the court of protection |
Sorry to hear about your dad. Dementia is so cruel and many more people than you realise have their own stories to tell of family members who are suffering with it. Fortunately my dad was very prudent and managed to put aside a lot of money to pay for his care should he ever have needed it. He was the chair of the Care Quality Commission so he certainly knew his stuff. Fortunately he lived to 90 and only needed the support of a care home during his final few weeks after a very brief stay in hospital. This all means that my mum can thankfully benefit from his careful saving over many many years. He would be pleased that she will at least receive the care she needs and will have the money to pay for it without wiping out any legacy for me, my sisters and all of their grandchildren. Also, my parents sorted out POA for me and my sisters years ago when they still had the capacity to do so. This meant when things got difficult we were able to act fast and take control. There'll be one hell of a crisis though when all of the boomer money has gone on care costs and future generations can't afford to pay for their care when they need it. God knows what happens then. [Post edited 27 Jan 17:03]
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Probate/Estate planning question on 17:32 - Jan 27 with 2711 views | stevec | Usual sound advice on here. Can I just add something for those who haven’t been through the dementia/care home scenario yet. A wife and husband can set up wills so whoever goes first leaves their half of their assets to their children but, in the case of property, set it up so it remains the property of the surviving parent until their demise (so the kids can’t throw the surviving parent out!). What that means is if the surviving parent has to go into care the state cannot touch the first 50% that has gone to your children. The problem if you leave it to your spouse is that the whole home becomes theirs and consequently, if the survivor goes into care the state can take the entire estate off you to pay for the care if you live long enough. Care at nigh on £100k a year these days, that is a distinct possibility for the majority of people. You will need a solicitor to handle this, specifically regards how the ownership of the home is set up, but it’s seriously worth looking at. | ![](/images/avatars/6823.gif) | | ![](/images/icons/ignore-user.png) |
Probate/Estate planning question on 17:48 - Jan 27 with 2687 views | StreathamRanger |
Probate/Estate planning question on 17:32 - Jan 27 by stevec | Usual sound advice on here. Can I just add something for those who haven’t been through the dementia/care home scenario yet. A wife and husband can set up wills so whoever goes first leaves their half of their assets to their children but, in the case of property, set it up so it remains the property of the surviving parent until their demise (so the kids can’t throw the surviving parent out!). What that means is if the surviving parent has to go into care the state cannot touch the first 50% that has gone to your children. The problem if you leave it to your spouse is that the whole home becomes theirs and consequently, if the survivor goes into care the state can take the entire estate off you to pay for the care if you live long enough. Care at nigh on £100k a year these days, that is a distinct possibility for the majority of people. You will need a solicitor to handle this, specifically regards how the ownership of the home is set up, but it’s seriously worth looking at. |
Thanks Steve. Because my parents both have/had homes in London, my mum is fortunately sitting on around £2million in property assets with no mortgages. She also gets half my dad's pension which was pretty chunky after decades working in Civil service. Add this to her own pension and she's bringing in more money than I am working as a teacher with 17 years experience. If you add rental income and savings then she can almost cover the cost of her care. Of course we have to manage all of this but we also appreciate how incredibly lucky we are to be in this financial position. I'm not going to have anywhere near her level of income/assets when I'm in my 70s and 80s so hopefully I can live a long and healthy life like my dad. Supporting QPR can't help much! [Post edited 27 Jan 17:51]
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Probate/Estate planning question on 18:54 - Jan 27 with 2620 views | SimonJames | There was a social care cap, limiting the cost of personal care to £86,000 per person over a lifetime, due to start from October 2023, but this has now been pushed back to next year. I don't know whether the likely change of government this year will affect that proposed change. | ![](/images/avatars/11425.gif) |
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Probate/Estate planning question on 18:56 - Jan 27 with 2616 views | StreathamRanger |
Probate/Estate planning question on 18:54 - Jan 27 by SimonJames | There was a social care cap, limiting the cost of personal care to £86,000 per person over a lifetime, due to start from October 2023, but this has now been pushed back to next year. I don't know whether the likely change of government this year will affect that proposed change. |
This is a bit of a red herring. There's an awful lot that the cap does not cover like food and accommodation in a care home. It will certainly help but you still have an awful lot left to pay. | ![](/images/avatars/0.gif) | | ![](/images/icons/ignore-user.png) |
Probate/Estate planning question on 19:07 - Jan 27 with 2591 views | SimonJames |
Probate/Estate planning question on 18:56 - Jan 27 by StreathamRanger | This is a bit of a red herring. There's an awful lot that the cap does not cover like food and accommodation in a care home. It will certainly help but you still have an awful lot left to pay. |
Sadly my mother died in her care home last year of post covid complications to her MS, sepsis and three different types of cancer, so it never became relevant. However father is showing signs of short term memory loss, so he may end up in a home next year. (: | ![](/images/avatars/11425.gif) |
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Probate/Estate planning question on 20:30 - Jan 27 with 2480 views | BlackCrowe | Great thread. Going through similar-ish. Mum had to go into nursing home (thank you St>peters Chertsety....they completely fckd her up (every other hospital was v good). Nursing Home is £1850 per week (opening gambit was £2100 before negotiation). Mum's house worth c£900k i reckon....literally have no clue how to play this to lessen the impact, cover costs, give something back to her grandchildren etc etc. First world probs of course, but it's real enough for us. Problem is the last three months have been so traumatic, i struggle to find the headspace to work out what's best. On the plus and most important side, she loves it in the home. [Post edited 27 Jan 20:33]
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Probate/Estate planning question on 20:42 - Jan 27 with 2451 views | Boston | Nothing to add. Just want to downvote a company called New Law in Cardiff. I had them handle my Mother's estate...they were dreadful. Steer clear if you're in need of this service. | ![](/images/avatars/0.gif) |
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Probate/Estate planning question on 22:33 - Jan 27 with 2301 views | Lblock | This is something every single one of will have to experience (death) Every single one of us can plan for it to ensure the maximum outcome and minimal stress for those we leave So few of us do it. It’s because it’s still viewed as cold and calculated. It’s not, nothing of the sort. If you’re lucky enough to be able to leave a financial legacy then get things sorted soon as, and ensure you entrust PoA to avoid further stress to anyone surviving you (especially in the case of health care) Streatham - kudos to your Dad. From the action you note he took above I can tell he was a fantastic family man with his head screwed on. Be even more proud of him for that. The very best of luck mate, (thanks for your PM response; seriously consider using Tony as he’s top drawer in this scenario), as you say - don’t get down about things, there’s always QPR to pick you up!!! | ![](/images/avatars/4057.gif) |
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Probate/Estate planning question on 23:55 - Jan 27 with 2248 views | StreathamRanger |
Probate/Estate planning question on 19:07 - Jan 27 by SimonJames | Sadly my mother died in her care home last year of post covid complications to her MS, sepsis and three different types of cancer, so it never became relevant. However father is showing signs of short term memory loss, so he may end up in a home next year. (: |
I'm sorry to hear this. Feel free to DM if you want to chat about my experiences with my mum and finding a care home for her. So many people have to look after their parents. You never see it coming until it hits you like a juggernaut. My sister's and I have just had to deal with everything with my dad dying and my mum going into a care home. Feels like there's some trauma being stored up for somewhere down the line which is why it's so important to talk to people about these struggles. | ![](/images/avatars/0.gif) | | ![](/images/icons/ignore-user.png) |
Probate/Estate planning question on 00:00 - Jan 28 with 2241 views | StreathamRanger |
Probate/Estate planning question on 22:33 - Jan 27 by Lblock | This is something every single one of will have to experience (death) Every single one of us can plan for it to ensure the maximum outcome and minimal stress for those we leave So few of us do it. It’s because it’s still viewed as cold and calculated. It’s not, nothing of the sort. If you’re lucky enough to be able to leave a financial legacy then get things sorted soon as, and ensure you entrust PoA to avoid further stress to anyone surviving you (especially in the case of health care) Streatham - kudos to your Dad. From the action you note he took above I can tell he was a fantastic family man with his head screwed on. Be even more proud of him for that. The very best of luck mate, (thanks for your PM response; seriously consider using Tony as he’s top drawer in this scenario), as you say - don’t get down about things, there’s always QPR to pick you up!!! |
Your kind words mean a lot, thanks. The more we have to deal with the more I realise what an incredible legacy my dad left behind. And you're right, he worked his whole life to improve the lives of people who needed help yet he would have wanted us to do whatever we could to provide for our children, his grandchildren, just as I will want my children to do when my time comes. | ![](/images/avatars/0.gif) | | ![](/images/icons/ignore-user.png) |
Probate/Estate planning question on 00:13 - Jan 28 with 2229 views | StreathamRanger |
Probate/Estate planning question on 20:30 - Jan 27 by BlackCrowe | Great thread. Going through similar-ish. Mum had to go into nursing home (thank you St>peters Chertsety....they completely fckd her up (every other hospital was v good). Nursing Home is £1850 per week (opening gambit was £2100 before negotiation). Mum's house worth c£900k i reckon....literally have no clue how to play this to lessen the impact, cover costs, give something back to her grandchildren etc etc. First world probs of course, but it's real enough for us. Problem is the last three months have been so traumatic, i struggle to find the headspace to work out what's best. On the plus and most important side, she loves it in the home. [Post edited 27 Jan 20:33]
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I hope you find a way to ensure your mum continues to get the best possible care she can. People who work in care homes are, in my experience, amongst the best people out there. It's an incredibly tough job yet they treat our loved ones with respect and dignity and usually for pretty low pay. Don't get me started on this governments approach to immigration. In the home where my dad died, I'd say 90% of staff were immigrants. They were amazing. There'll be nobody left to look after us when we get old if we're not careful. [Post edited 28 Jan 0:13]
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