Q I live in Australia while my divorced elderly parents and two sisters live in the UK. Since February 2022 my father has been living in a care home as he has dementia and is unable to care for himself.
For the past 15 years or so, my younger sister has been paying my father’s bills and has had access to his bank account. My older sister has power of attorney and is the sole executor of my father’s will.
Communication with my sisters hasn’t been good over the years. My older sister gets in touch occasionally but my younger sister hasn’t responded to any of my emails or phone calls in more than a year. However, a few days ago I received a handwritten card from her telling me she has sold her house and intends to buy our father’s house and saying: “Obviously the sale proceeds from mine will go into his account and cover any of his care costs.” She went on to say “I wanted to let you know that we are all in his will as a third share so wanted to keep you up to date.”
This doesn’t seem right and I am upset that it looks as if she is trying to do me out of part of my inheritance and it is upsetting while my father is still alive. Is this legal? I’m also worried about inheritance tax implications, funding requirements from the council for my dad’s care, and stamp duty. I don’t know whether the house has been valued or if my sister is going to buy it for a significantly lower price than the market value. Also where is my older sister in all of this? Surely as power of attorney, she has responsibility to do the right thing and ensure legal requirements are met?
A If anything is diddling you out of your inheritance, it’s the system for paying care home fees in the UK and not your sister. In the 2022-23 tax year, if you have capital of more than £23,250 in England and Northern Ireland, £29,000 in Scotland and £50,000 in Wales, you get no local authority help with paying care home fees and only partial help if you have capital below those limits. When assessing someone’s capital, the value of property left empty after moving into care is taken into account – but not a property where a spouse is still living – as well as savings and investments.
So it looks to me like your father – via your sister – is having to meet his care home costs in full. It also looks to me like the house is having to be sold for your sister to be able to continue paying your father’s fees (I am in the same position and can assure you that care home fees are not cheap.) I admit it is unusual for your sister to buy your father’s house but I really can’t see what the problem is given that she has said that the money she will be using to pay for the house is going in to your father’s account. As your older sister has power of attorney for your father, it is she who will be responsible for selling the property to your younger sister and she is responsible for getting the best price possible. But maybe you should check with her.
As far as inheritance tax implications go, there aren’t any. Had your younger sister been given the house, there might have been. But as she is buying the property fair and square (although you might not agree with that), inheritance tax doesn’t come into it. I am stumped as to why you are worried about stamp duty (strictly speaking stamp duty land tax) because, if applicable, it is paid directly to HM Revenue and Customs on the purchase of a property and not on the sale of one.
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This article was amended on 21 October 2022. In an earlier version, a reference to thresholds for local authority help with paying care home fees had mistakenly referred to capital “less than” £23,250 in England and Northern Ireland (etc), when “more than” was meant.