This week expert Mark Gregory is helping a daughter whose parents took out an equity release plan without the family’s knowledge. What does this mean and how will it impact their inheritance?
The Question
I have discovered recently my parents took out equity release on their home and on the paperwork, under the section ‘family informed’ the ‘yes’ box has been ticked. However, neither me nor my sister have any knowledge of this happening.
My father died several years ago and my mother is now suffering with dementia and we have enacted PoA. It has been a bit of a shock to discover this news.
My questions to you are regarding how to proceed from here. Firstly, is there a way we can take action over the fact we were not consulted? Is there an ombudsman?
Secondly, how will the fact the house has had equity taken impact the sale and proceeds? It looks like it’s a lifetime mortgage taken out in 2017. Thanks for any advice.
Mark’s Answer
Firstly, I am sorry to read that your mother has been diagnosed with dementia, and I hope she is comfortable and being well cared for.
Here at Equity Release Supermarket we always encourage customers to ask family members or friends/confidants to be involved at every step of the application process; however, some customers prefer their independence and privacy which we have to respect.
I can understand that finding out your parents took equity release without your knowledge is a shock as it will impact their estate and reduce the inheritance they leave.
If your parents took a Lifetime mortgage, your mother will now still own 100% of her home, and the mortgage will be repaid from the sale proceeds, when your mother either passes away or needs long-term residential care.
Although I do not know who advised your parents to take equity release, I can imagine you have many questions starting with what they did with the proceeds of equity release, why were you not consulted, did they take independent legal advice, who is the provider, can I get more information from the provider and advisory firm?
If you know who the provider of the Lifetime mortgage is, they can inform you who gave your parents the advice and then you could contact the advisory firm, using your Power of Attorney, to ask more questions relating to the advice that your parents were given at the time.
If you are not entirely satisfied with the response you are provided with and feel that you need to complain about the advice, you can do so using the Power of Attorney. The advisory firm will investigate your concerns, and if you are not entirely happy you could consult with the Financial Ombudsman who would consider your appeal and arbitrate independently.
If you do not know who the provider of the Lifetime mortgage is, you could contact the Land Registry as there will be a legal charge on your parents’ home, and this will confirm who the mortgage provider is.
Here at Equity Release Supermarket, the application process for equity release can take approximately six to eight weeks, and if your parents have a Lifetime mortgage taken out in 2017, all providers insist that customers take independent legal advice, and this is a strict standard imposed by the Equity Release Council.
Your parents would have taken this legal advice in the comfort of their own home without the financial adviser present. I assume their legal adviser would have explained the legalities of the plan to ensure they were aware of the commitment they were making.
Once your parents were entirely happy, they would have instructed the legal representative to accept the formal offer from the provider. Furthermore, when you contact the provider they will inform you which law firm gave your parents independent legal advice.
Meet our expert
Mark Gregory, founder and CEO of Equity Release Supermarket, is here to answer your questions. Mark is an adviser himself with over 20 years equity release experience.
He launched Equity Release Supermarket 10 years ago and it has grown to become one of the UK’s leading equity release specialists.
