The latest blog in our conveyancing FAQs series sees our solicitors help out a person whose parents may be able to increase the size of their retirement nest egg.
Should my parents consider equity release?
Q: My mum is 67 and dad 73. They have been self-employed throughout their working lives, but because they didn’t have a private pension and enjoyed the good times they don’t have much saved up in retirement.
As a result, since retiring 7 years ago they haven’t had much money to spend. However they do own a mews house mortgage free which has greatly increased in price because of its location. I have a good career and don’t want them to leave all their money to me if it means they’re not enjoying retirement.
Should I suggest equity release to them?
A: Your parents are able to benefit from equity release, as homeowners must be at least 55 to qualify.
To enjoy equity release, applicants will either select a lifetime mortgage or a home reversion plan in order to pay back the tax-free lump sum. This payment may affect your parents’ entitled to state benefits.
One of the major drawbacks of equity release is that it can diminish the value of an estate but you seem to be content with that. It’s recommended that your parents seek further advice from an independent financial adviser who is a member of the Equity Release Council (ERC).
The ERC is an organisation that has been created to protect consumers during the process of obtaining equity release. It’s recommended that any financial adviser, lawyers, intermediary or surveyor that you work with during equity release is affiliated by the ERC.
The IFA will talk to your parents and build an understanding of their financial and personal circumstances before recommending whether equity release is the best option for them. They will also advise which specific equity release product is the best option.
Suggest the option of equity release to your parents and see what they think.
Howells Solicitors specialise in providing probate and asset management advice. For more information, or to speak to one of our legal experts, call 0808 178 2773.
by Tristan Lewis
(Image:Simon Cunningham under CC BY 2.0)
