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Gift, loan, or investment?

The pitfalls of moving an elderly relative into your home in an attempt to save money on care home fees are not to be underestimated, says Caroline Cook

17 February 2015

For many, the thought of all the money they were due to inherit being used for their parent's care home fees is enough to make them consider any other alternative. I'm increasingly finding that people are choosing to move in with their children or relatives, often contributing towards the cost of building an annex or extra bedroom or bathroom to the property. Where the parent has more than one child, this can cause friction in the family.

How is a monetary contribution
to be viewed?

Is the contribution a one off gift which is to be considered a potentially exempt transfer? And provided the donor lives a further seven years, does it simply reduce their estate? In this situation, the child providing the accommodation has benefited from the relative's estate to the detriment of other beneficiaries.

Is it a loan? In this case the appropriate paperwork must be drawn up and a charge taken over the property. Is the ...

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