Terminal illness of spouse, 2 properties

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biccie

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6
Age: 50
Spouse’s/Partner's age: 59

Annual gross income from employment or profession: c€110k
Annual gross income of spouse: c€50k (retired early on ill-health, employer pension topped up by income protection insurance)

Monthly take-home pay: c€6000.

Type of employment: Self-employed (me), Retired (Spouse)

In general are you:
(a) spending more than you earn, or
(b) saving?
Saving for past 2 years, after struggling a few years ago due to 2nd property renovation which cost €200k.

Rough estimate of value of home: €280k
Amount outstanding on your mortgage: €125k (€1300 per month, 9.5 years remaining)
What interest rate are you paying? €1.15% tracker

Other borrowings – car loans/personal loans etc: None

Do you pay off your full credit card balance each month? Yes, both of us.
If not, what is the balance on your credit card? n/a

Savings and investments: €82k in a current account that offsets against the tracker mortgage (i.e. at 1.15%)

Do you have a pension scheme? Yes, currently €200k pot. I maxed out the contributions for 2019. Wife has pension pot of €135k not being drawn down or contributed to at the moment)

Do you own any investment or other property? Yes. Renovated wife's ancestral home, which we intend to retire to (lifetime dream of my wife to renovate it and live there). Value of property €300k, mortgage outstanding of €63k at 2.45% fixed till end of 2021 (€550 per month 12 years remaining). We currently rent it for short-term rentals earning about €20k gross (c10k per year after tax).

Ages of children: No children.

Life insurance: Wife has it for each mortgage. I don't.

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

My wife has a terminal illness and is likely to pre-decease me within 5 years. Her health insurance is covering all major health expenses. Both properties are in her name.

Without this, the long-term strategy would probably have been to use savings to paydown the 2nd property mortgage, sell our current home and live in the 2nd property for the remainder of our lives.

Given the actual health situation we are planning to move to the property earlier than planned (within the next 6 months) for wife to enjoy living there for years to come. What do we do with our current home? If we don't sell, the mortgage life assurance will clear the mortgage when she passes leaving €280k equity, if we do sell now there is €155k equity for her to play with. If we don't sell, should we rent it and then be exposed to CGT when I eventually sell it?

Wife wants to do c€50k of further improvements to the 2nd (dream) property, which I want to do to help her see her dream fully realised. We could fund this from the amount in the current account offsetting the mortgage.
 
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I'm so very sorry for this sorrow in your lives.

I'm sure others will give you sound financial guidance, but here's mine.

Do whatever will make you both happy for as long as ye have left and stuff the cost.

There's no pockets in a shroud.
 
I'm very sorry to read of your wife's diagnosis. I think the only big question you have to consider is do you have any reason to hold on to your current home. Is there any good reason to keep it? Do you have a sentimental attachment to it or do you think it would be financially better for you to have it?

Selling it now would not just mean a lump sum of money it would also free up €1300 monthly. Personally I would be inclined to sell it, I think as your wife's condition progresses you may not want to have the hassle dealing with tenants on top of everything else. Focus on your time together.
 
I'm so sorry to hear this and wish you both every happiness for the years to come.
My only question to you is, will you be happy to stay in your wife's home place when she passes or do you think you would like to move back to your current home in time?
 
Phoenix`s point is very valid in making big decisions, as in, is it also your dream to continue to live there in time to come.
 
I'm very sorry to hear of your wife's illness.

I can only echo the sentiments of others and say that your wife's (and your) happiness is the priority so simplifying your finances will go a long way to achieving that. In your shoes, I would:
  • Sell the PPR and add the €155k to your €82k savings. In 5 years time there may not be much value in the PPR mortgage protection so don't try to time it.
  • Spend the €50k on your second property but keep the mortgage. This keeps more cash (~€187k) on hand for you and your wife to use/enjoy
  • In the meantime, you will have a lot more cashflow now that you are not paying the €1300 PPR mortgage (but you will not have rental income). So you could increase your own pension contributions just to look after your own future too. This shouldn't be a problem because you will have cash savings to use for any ad hoc spending in the next few years.
  • Consider whether you want to work full time or not over the next few years. Time together could be more valuable to her than spending money
Apart from that, @phoenix53 makes a good point about whether you will want to continue living in your wife's dream home. When the time comes, you have a good income so you could easily buy a new property with a small mortgage and return to renting that property or simply sell and move to where you want to live.

I can only wish you the best over the next few years but keep things simple and enjoy the time you still have
 
Obviously talking about finances seems utterly frivolous at a time like this. I can only wish you the best for the next few years.

biccie said:
Do you have a pension scheme? Yes, currently €200k pot. I maxed out the contributions for 2019. Wife has pension pot of €135k not being drawn down or contributed to at the moment)
Click to expand...

Im not sure what the status of you're wife's pension is. Will she be in a position to drawdown from the fund if required? If not or you wont need to, then it is worthwhile considering what this fund is invested in. The fund will likely pass to your wife's estate/you when she passes. You will receive this as a tax free lump sum. The fund should be transitioned towards cash over the next five years, you probably dont need the investment risk over that time. If you are in a position to make pension contributions, then consider using her higher rate contribution relief as, again, you will receive the monies in the medium term.
 
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