Question: Our mother needs nursing home care and we are looking at options. Dad died a few years ago and two out of three of us children don’t live nearby. The burden is too high on my sister and home care has been sporadic.
er GP recommends residential care and wants us to get the Fair Deal documents together which he is happy to support. However, we don’t know whether it is best to sell her home now while prices are still high and avoid the HSE being able to claim against it, or leave it as is. I understand there is a limited amount they can take but even still, it’s a huge chunk into the inheritance I know Mum wants to leave to us.
Answer: The answer to this is not simple, but I need to start by saying you don’t ‘avoid’ the HSE claiming a portion of an asset by having it in a different format, ie cash rather than property. In fact, it could make things worse. I understand you are trying to weigh up the risk of a house price drop versus savings under Fair Deal but I’m going to assume your question is not about evading the contribution but about timing.
Peter McElroy, of Fair Deal Solutions explains your options: (a) Selling the family home before Fair Deal is approved/drawn would mean the application would show a large cash balance in a bank account which doesn’t benefit from the three-year cap rule, unlike the family home. Fair Deal would seek 7.5pc of all assets over €36,000 for each year she is living in a nursing home.
Option (b) is to sell the house after Fair Deal is drawn — under the three-year cap rule, 22.5pc is the maximum that can be taken, leaving 77.5pc of the value of your mother’s estate to be distributed in accordance with her will. If you decide to sell the house then, the proceeds will also enjoy the three-year cap protection, in new rules just brought in. While option A locks in market prices now, if you sell it before approval, you will be open to unlimited stripping on the cash as long as she lives. Option B limits the amount Fair Deal can take, but Mum risks losing out in a potential house price drop.
“That’s the trade off,” says Mr McElroy. “Not to be insensitive, but your mum’s age is a consideration, as is likely longevity.” He adds that by year three, the cap is maxed out, therefore no further value can be taken from the house. That’s not the case if you sell it. “Finally, you need to ensure she actually qualifies for Fair Deal. If her income and assets are over the actual cost of a nursing home, she may not.”
Question: My partner and I are planning to buy a home together. He is separated, I am divorced. His ex-wife will not agree to divorce, so we have no plans to marry. We are both selling our own homes to facilitate the move, but the issue is that I have no mortgage, and so can contribute the entire contents of my sale (approx €580,000), but due to his separation, my partner has a huge mortgage on a small apartment so the equity is less than €100,000. We have every intention of staying together, but how can I ensure that I am protected just in case? I have two (grown-up) children I want to take care of also.
Answer: From what you’ve stated it’s unclear if it’s an acquisition based solely on pooling your resources, or with the addition of a mortgage. William Tilley, senior associate, Ivor Fitzpatrick & Co Solicitors says that aside from independent legal advice, which he strongly recommends, you need to decide how to register the property.
“You can hold title as sole owner (as you are clearly providing the bulk of the funds), as joint tenants, or as tenants in common. If you intend on holding the property jointly, it is advisable to do so as tenants in common. This means that you and your partner will spell out what percentage of the property each of you own in defined shares, eg 50/50 or in your case 85/15. Each person can leave their share of the property to whoever they wish but you must make a valid will stating this fact.
“If you do not make such a will, your share of the property becomes part of your estate if you die, and distributed according to the rules laid out by the State. These do not automatically provide for unmarried partners. Without a will, he could be left with nothing.
“Holding a property as joint tenants means you both co-own the property in equal shares. However, this does not seem the appropriate method of holding title in your case given the differences in financial standing.”
He adds you absolutely need a cohabitation agreement, “which is legally binding to protect your financial interest should something go wrong”, covering managing day-to-day expenses, to how a sale would divide assets if the relationship dissolves.
Practically, it also prevents against your partner’s inability to meet their obligations from impacting your personal financial history (ie your credit score).
Finally, keep records of all monies, especially contributions to the house purchase.
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