Equity release vs family help for a relative's care

[malumbu]

Great to hear of others experience. A very elderly aunt is looking at equity release on her home of 70 years to pay for her live in carer. She's physically a mess but mentally all there and will not go into a care home. That is her exercising her choice.

We may be able to club together to support her for a couple of years and the debt will be repaid in the will, with a modest return on the investment. I'm more bothered about the impact of equity release which I understand is where the lender buys your home, at a low value, and lets it back to you. No concern about inheritance, and any interest on our investment is tiddly compared to the effective losses on equity release.

I expect that others have faced similar situations and would welcome your views. Please do not troll me about being uncaring, talking about putting her in a home, or being only interested in the money. There are a number of nieces and nephews, but only two of us looking to help out. Being of sound mind she will make the decision, it's good to say this about someone in their 90s, particularly considering seeing how my mother deteriorated when going into a care home.

[Seabag]

I?ll dm you tomorrow 👍🏽😅

[redpost]

You need to be wary of inheritance tax and legal implications. If you pay for her care without some kind of formal agreement, it's likely that this would only be repaid after IHT or indeed may not be paid because of the will.

I think you really need some *paid* professional advice, don't take any equity release or lifetime mortgage from the advisor as they'll be making a chunk of commission, just pay for their legal/financial advice and go to a broker or look at the market yourself.

[malumbu]

Thanks Redpost - the value of the property is below the inheritance tax threshold - and as the will is split between a number of relatives is not an issue in any case. We'd do it through a solicitor and I understand that this arrangement is fairly common.

She's had an IFA around, I understand that commission is around ?1750, but advice included "is there not a family member who can lend you the money rather than go down equity release"

She's very hard of hearing so difficult to sort on the phone, if SE22 and the surrounding areas have just heard a very loud phonecall then that was me!

[Pugwash]

Had to deal with a client many years ago, who was very vague about her finances and it turned out that her husband had taken out an equity release many years ago before his death. Her property in ED needed considerable repairs which had not been done since his death. The property was worth considerably less than the amount originally awarded by the Equity Company- it got so complicated that we advised her to take legal advice. Never found out what happened.

[intexasatthe moment]

Is a live in carer the answer ?

If care is needed at various points throughout a 24 hour period ( help at night with toileting ,turning )as opposed to targeted care provided at specific times ( help in and out of bed ,washing ,eating )your aunt will need more than one live in carer . Cover will need to be provided for time off ,holidays ,sickness etc .

Unless you hit on a good match it can be very wearing having carers coming in or residing with you .

Have you explored all other support systems ? Pendant alarm ,local authority or private carers ? Does she have an attendance allowance? Meal delivery ?

I wish you luck ,it's a bit of a minefield .

[Pugwash]

Seek an Assessment of Needs from local Social Services - they will highlight what her needs are. She could be eligible for a Personal Budget - where the social services would calculate the cost of x number of hours care, look at her income and savings (over ?14,250 will need to contribute ?4 per ?1,000, over ?23,250 full costs) and to arrive at a personal budget which she could use to pay towards a private carer or use a recommended agency. From what you were saying, it looks as though your aunt needs 24 hour care and help with toileting/personal care/food preparation/ mobility/household tasks. Does she have Attendance Allowance either at the basic or enhanced rate?

Having done some research for a friend who has dementia - his local social services base their home care costs at ?14.88 per hour with Day Centre costs at ?39 per day (Each local authority will have different rates) Get an OT Home Assessment (if not already done so) for aids around the house. Seek out Tele Care options for the area - i.e falls alerts,intercoms,sensors in rooms etc.

Live in carers - will need at least 3 as they work a rota system and break times need to be covered i.e. Carer A will need 3 hour break during day so carer B will cover.Carer B takes over full time caring whilst A has week or so off, so carer C will cover B's daily breaks etc. My friend who now has dementia, had a live in carer for his mother who had reduced mobility and dementia, he was out working as a taxi driver during the day and evening, so carer got mum ready for the day and gave breakfast, carer then had a break which was covered by my friend as he did not start work until 1pm, and then carer did rest. This worked well for around 3 years until Mum died at 101 years

[jazzer]

I know someone who's OH took out Equity Release not fully appreciating the consequences of what they were doing and the debt has now escalated to such an extent that when the house is eventually sold, the ER firm will walk away with at least 25% of its current value, say if it were sold today. The ER firm naturally do very nicely out of such an agreement, with the interest calculated on a compound basis. So, unless your aunt is OK with that, from what I've seen, try and steer well clear from equity release at all costs. The only winner is the ER company, everyone else loses.

I hope your aunt is OK and you can arrange the necessary care for her remaining years.

I also know someone who went into a dementia care home and whilst the care was very good, it was extremely expensive for her family to pay for. I saw her deteriorate over a nine year year period in both her physical and mental health. It was a very sad end and upsetting to see people have to live under a dementia regime that effectively removes their freedoms, with (DOLLs) Deprivation of Liberty Orders being applied to them.

[malumbu]

Thanks all for the really helpful views. My Aunt took the decision a few years ago to get a live-in carer. For her a care home is a last resort. She saw how quickly my mother deteriorated in her care home, but this is not a fair comparison as my Aunt has much better mental health, and care homes will be suitable for many at this age.

I'll talk to the local Age UK office, who were very helpful in getting her reassessed by Harrow Council.

[JohnL]

I notice Equity Release is being called a Lifetime Mortgage now.

There would be reasons to do it (if you have no dependents for instance) - the same as cashing in a final salary pension - but only with advice.

[malumbu]

Thanks all. She has gone for equity release as felt embarrassed at the family offering. IFA charges ?1750, but the interest on the loan is only 3.5% (LV) which in the great scheme of things is reasonable, and as important a proper valuation on the house rather than using probate value (20% less). Legal fees around ?800,

So whilst we would have given a better deal, this is being done properly. At least we didn't have to work out our return (a third member of the family said 0%, I thought inflation + .5% was reasonable, but not far off what she is paying.

Just found out that I am next of kin, so something else to think about. Family member who had worked for Citizens Advice, Age UK very helpful. As are my good friends in the area on EDF.