Moneymakeover Mother in Law - preparing for next few years

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smndly

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Personal details

Your age: 75
Number and age of children: 2 adult children

Income and expenditure
Annual gross income from employment or profession:
Non-contributory pension = €14,000
Rental Income = €18,000 (significantly below market rate)
Monthly income: €2,666

Type of employment – Retired.

Summary of Assets and Liabilities
Family home value: c. €1.5mill
One Rental Property: €600k (never PPR so full CGT would be due if sold)
Cash €80k
Mortgage on family home: none

Other borrowings – car loans/personal loans etc
None

Pension information
Value of pension fund: none

What specific question do you have or what issues are of concern to you?

Family member planning on next few years. High illiquid asset wealth.
Very fit and well but given age is keen on having means to pay for live in carer in future if required to postpone nursing home if eventually needed.
Also want to have access to more day to day cash at present to enjoy day to day hobbies and trips abroad.

Option1. Sell rental property leaving €400k cash post CGT.
Would consider low risk investing this with focus on income generation such as in something like Irish govt bonds. Would this be a good place to invest this given no tax is paid on income generated here or are there any other good options? Concern with this option is that income generated won't be as much as rental income and therefore would burn through capital at a rate whereby it might all be gone before needing live in carer/ nursing home.

Option 2. Sell family home and downsize. Difficult to find properties that are suitable in area where she wants to live. Likely property price of downsize options c.850k leaving €650k cash. And if one comes up it is very difficult to see how you could go sale agreed and then sell the family home to finance this in a satisfactory time frame for the seller. Also fairly stressful prospect to go through all of this for a 75yo.

Option 3. Spry finance and take a life loan on either rental or family home. Wary of high interest rate but could be an option to release equity.

Option 4. Stay as is and continue to live off income but cash pile is slowly depleting as family home upkeep continues to eat into this.

Open to any other options that people may have experience of as i'm sure there are many others in a similar circumstance. Thanks!
 
smndly said:
Option 4. Stay as is and continue to live off income but cash pile is slowly depleting as family home upkeep continues to eat into this.
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I hope you can see how ridiculous this sounds for a person with almost €2m (after CGT) in assets. I person with this level of wealth really shouldn't be worrying about upkeep

smndly said:
Concern with this option is that income generated won't be as much as rental income and therefore would burn through capital at a rate whereby it might all be gone before needing live in carer/ nursing home.
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I can never understand this logic either. What else is the capital for other than to be spent on maintaining themselves. I can never understand how some people will live in "relative" poverty because they want to keep it in a will.

Her adult kids will share €1.5 - 2 million when she passes, she should use as much of it now as she needs to be comfortable.

smndly said:
Option 3. Spry finance and take a life loan on either rental or family home. Wary of high interest rate but could be an option to release equity.
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While Spry is a suitable option for many, it really isn't needed here.This will deplete her wealth faster than anything else.

New Option 5: Sell everything. The PPR does not sound like it is suitable for her needs and no 75 yr old needs to be living alone in a €1.5m property or managing a rental with a terrible yield of only 3%.

Sell both, realise almost €2m in cash and then become a cash buyer who can close quickly on a new PPR at €800k - €1m.

After that she will probably notice that her income needs will probably drop significantly without the need to maintain an older property. She could seek Financial advice and look to invest some of the cash pile but even if it was in secure high interest deposit accounts, she would not be eating into much of the capital.
 
smndly said:
And if one comes up it is very difficult to see how you could go sale agreed and then sell the family home to finance this in a satisfactory time frame for the seller.
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She doesn’t need to do this. She can sell her PPR and live in the Merrion Hotel for as long as it takes to find a smaller property. She is wealthy enough.

I agree downsizing is good. I’ve viewed quite a few houses in the low seven-figure zone and many, many suffer from having been underutilised and poorly maintained often for decades.


Otherwise she actually has a long menu of reasonable options and picking one shouldn’t be too hard.
 
If the current home is not suitable for her now, and going forward then buying a new apartment/house that has minimal upkeep required should be a better bet.
And moving now when she can rather than in 10 years time is probably a good idea.
Sell
Rent a serviced place or other short term until the new place is ready. As commented above a hotel is well within her means.

Have a couple of elders in the family I’d say do it sooner rather than later. And don’t penny pinch with storage units and short term lets to help with the transition. In the overall scheme 5k on rent and storage is feck all
 
"no 75 yr old needs to be living alone in a €1.5m property" Really??

Sounds a little condescending considering the opening description is of a person who is "very fit and well".
 
Does she need to move?

Is the current home unsuitable? Can it be adapted if needed? Sounds like the only issue is maintenance on the family home. Sell the rental property and use the cash to update the home and live on her pension? The pension won’t be enough to cover live in care (if needed) but the house might provide accommodation for a carer which could be a self contained flat in the meantime to let to generate an income.

It seems that the problem is the cost of maintaining the house, so getting rid of that seems like the best bet. Downsizing should release some equity and reduce future outgoings. We did that, not much equity released (due to our choice of area etc) but we avoided major repairs that were looming and would have eaten our cash/income.

But don’t downsize too much, a spare room for live in help might be useful.
 
You've got a number of things to consider here, and whilst it is great that she is fit and healthy, that could change
  • Firstly, ensure the will etc is sorted at this stage.
  • Secondly, I would seriously consider an Enduring Power of Attorney, given the value of the estate, so that if the worst happens and she gets to a stage where she can no longer manager her affairs, someone else is picking it up
  • If she has a rental property, not getting market rent and is struggling to maintain the main house, why keep the rental property?. Yes, there may be CGT but tax is going to have to be paid at some stage. Sell it
  • The cash used from the sale could then be used to upgrade the home house and/or allow her a better standard of living in her later years, including potentially funding any home care or home help.
  • There is a 5 year timeframe for Fair Deal, where the offloading of assets can be back calculated so the sooner she can reduce her assets (aside from her home), the better
  • Cash may also allow her to start gifting some of it and reducing her cash pile so if she did not need Fair Deal for 5 years, it is a reduced asset base for the assessment.
There is no need for Spry Finance or any of those.
 
Annieindublin said:
The pension won’t be enough to cover live in care (if needed) but the house might provide accommodation for a carer which could be a self contained flat in the meantime to let to generate an income.
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My grandmother had round-the-clock care at home for about 18 months. It was a team of about six people doing eight-hour shifts.

It would have been too much for one person resident at home.
 
She currently has an income of 30k per annum so I'm guessing this is more than enough for day to day living. If she sells (investment property) she will have at least enough for another 15 years without any investment. She should use 50 or 60k to bring the home up to a good standard and enjoy another 10 years before even worrying about the next step. The house and area is where she wants to be so she deserves that.
 
If she wants to stay in her home, perhaps with live in care, then the Fair Deal as it is currently set up is irrelevant. It only covers nursing homes. It might get updated at some stage.

If the investment property is too much hassle then selling and drawing on the resulting cash seems sensible.
 
I agree

We have discussed it with my parents a few times. At this stage they don’t want to ever leave, as long as the carers turn up as planned, 3 per day, and there’s enough support from me and my 2 siblings we will manage. The agency have offered an overnight person for surprisingly little money, not a full time carer but a support at night who’d raise an alarm if needed and make breakfast in return for a small fee and free accommodation. So that’s our long term plan if needed.

We looked at Fair Deal and worked out the implications. But they have a fair chunk of cash which would be exhausted first. And they plan to exhaust that with home care before considering a nursing home. As long as there are no falls or strokes we should be OK.
 
Any chance the investment property would be a suitable property to downsize to with renovation to suit her needs?

Probably would be the most tax efficient option if it was anyway possible.
 
Thanks everyone some very insightful advice here. We've had a good chat about it and have taken on some of the advice here.

I think the family home is likely not going to be sold as the upheaval this would bring is too much unnecessary stress and it is in a location she is very happy with.

Unfortunately the rental property is not ideal to be the downsizing option due to location and layout/futureproofing.

I think the most likely option that will be taken is to sell the rental property and realise the 400k net cash resulting in a total of 480k Cash. Then I would hope to engage with a financial planner to set up a plan to hopefully be able to use this money to generate an income. I would hope that approx 20k per annum (4% yield) from both dividends/income and use of capital if needed would be achievable but with some liquid assets in case of emergency house maintenance or a new car etc.
 
What level of income does she actually need?
Has an analysis of essential and discretionary household expenditure been carried out?
E.g.:

Moneymakeover - Household Budgeting Comparisons?

Not sure if the correct place... Life has been in (financial) flux for the last 4 years (house purchased, wedding, new baby, mat leave) but 2025 has brought some stability so I have had a look at our income and expenses. I track both pretty well. We both have decent incomes, don't live...
www.askaboutmoney.com
smndly said:
Non-contributory pension = €14,000
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It still hasn't been clarified if this is a mistake and should be a contributory pension?
smndly said:
Rental Income = €18,000 (significantly below market rate)
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Gross or net after taxes?
smndly said:
Monthly income: €2,666
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Ditto?
 
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