Terminal disease, IT and buying a shared ownership

Lizzibuff · 7 February 2018 at 8:34AM

Hi

Can I ask some advice please.

My mum is suffering from a terminal disease though is fighting it. She was given 18 months to live - 8 years ago.

She has just got divorced from my dad and has a lump sum of about 120K (from the sale of their house) and she has been receiving full time care in a home for the past 3 years.

She wants to gift this lump sum to me to buy a 50% shared ownership house which I will then rent the other 50% - this is in order for me to sort my own finances out and finally become debt free so I can get a mortgage and buy the other 50%.

Is this legal as she's currently receiving care? Is this liable to Inheritance Tax - if she gives me this money and then dies before the 7 years - will I lose my house??

Thank you

silvercar · 7 February 2018 at 9:30AM

Has she kept other money aside to fund her care?

There could be a liability to inheritance tax depending on how long she lives and the value of her estate. The liability falls on the estate not on you, so the payment would come from the estate initially.

00ec25 · 7 February 2018 at 3:29PM

not what you want to hear but unless mother has enough money to cover whatever fees she is going to have to pay until she dies, any money she gives away now would be a clear case of "deprivation of capital" and would impact how much, if any, state funding she will get towards her care fees going forward

as for IHT, the money she gives you will be classed as a PET - potentially exempt transfer, That means it will be included in her estate for IHT purposes for the next 7 years. If she lives longer than 7 years it will be totally exempt from any IHT her estate will owe if her estate is above the IHT threshold to start with.

If she dies before 7 years then part of the money is added to the value of her estate on a sliding scale.

xylophone · 7 February 2018 at 4:35PM

and she has been receiving full time care in a home for the past 3 years.

Is this NHS Continuing Care?

Or is she funding her own care?

Or would she have been funding her own care if your father had not been living in the house?

https://www.ageuk.org.uk/information-advice/care/care-homes/paying-for-a-care-home/

Lizzibuff · 7 February 2018 at 8:06PM

Yes her care is currently being funded through NHS continuing care. This would be pretty much the entirety of her estate. So nothing else to add to it once she died.

I appreciate that if any tax due it would be from her estate but as she wouldn't have any - would they come after my house?

And if it is deemed to be 'deprivation of capital' - would they refuse to pay for any care for her (as she would have nothing left at all to pay for her own care) and again - would that mean I lose the house?

I appreciate it might not be what I want to hear - but I need to know where I stand before agreeing to do this as I don't want to be forced out of a house in 6 months time and have nowhere to live myself!

Thank you

Lizzibuff · 7 February 2018 at 8:39PM

Also, this money is currently held by the solicitor and has not hit my mums bank account - so technically has not yet been received.

Does this make a difference? I think mums idea is for the solicitor to gift the money direct to me so she never actually 'touches' it.

Thanks for your help.

00ec25 · 7 February 2018 at 8:43PM

Lizzibuff wrote: »

I appreciate it might not be what I want to hear - but I need to know where I stand before agreeing to do this as I don't want to be forced out of a house in 6 months time and have nowhere to live myself!

no one on here can say for certain as the attitude of each council towards "deprivation" varies enormously

however, what is certain is that to claim the transfer of money from her to you there are 2 conditions both of which need to be met:

1. You must have known at the time you got rid of your property or money that you needed or may need care and support. Mother is already receiving care so that much is blindingly obvious

2. Avoiding paying for care must have been a significant reason for giving away your home or reducing your savings. note "significant reason" - that is purely subjective and is impossible to say what the attitude of the council person undertaking your mother's means test would be. If that person does decide the transfer to you was significant then yes you may well have to pay towards your mother's care and if you don't have enough cash of your own to pay that then you may well have to sell the house to raise the cash. Could I suggest that one way of looking at it would be she has "suddenly" come into amore money than she has ever had before and the one thing she did with it was immediately give it awy despite the fact she could have used it herself -
"significant"? I'd say yes, but I'm not the one doing her means test

please read the links you have already been given, they lead on to much more detailed info, for example: https://www.ageuk.org.uk/information-advice/care/social-care-and-support-where-to-start/paying-for-care-support/deprivation-of-assets/
there is also a very detailed .pdf document on those pages which you should read, particularly page 10 section 8.2 "Recovering charges from a third-party
If you transfer an asset to another person (a third-party) to avoid a charge prior to the means test, they may be liable to pay the local authority the difference between what you would have been charged and what you were charged at the time of the financial assessment."

if you want a simple and safe answer - tell your mother to keep her inheritance as she will need to spend it on herself. Yes she will doubtless hate that answer as it means she has left you nothing, but that is the way of the (modern) world, care is no longer "free"

SuperHan · 7 February 2018 at 9:48PM

00ec25 wrote: »

pay the solicitor to advise you on whether a "variation to the will" would stand up against an assessment of deprivation

under a variation your mother legally renounces her right to be the beneficiary of the will and transfers it to you. perfectly legal and quite common thing to do where money is thus skipping a generation from grandparent to grandchild, but in the context of possible deprivation ????

Mother isn't beneficiary of a will - she's received a divorce settlement following the sale of the house, so that won't help much.

xylophone · 7 February 2018 at 10:19PM

With regard to IHT, it appears that your mother's estate is well within the IHT Allowance.

https://www.gov.uk/inheritance-tax

Your mother is in receipt of Continuing Care Funding and will be entitled for the rest of her life?

http://www.whentheygetolder.co.uk/the-10-biggest-myths-about-nhs-continuing-healthcare-funding/

http://www.beaconchc.co.uk/

https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs20_nhs_continuing_healthcare_and_nhs-funded_nursing_care_fcs.pdf

The above might be of interest.

getmore4less · 7 February 2018 at 10:35PM

00ec25 wrote: »

If she dies before 7 years then part of the money is added to the value of her estate on a sliding scale.

That is not what the HMRC manual says for gifts below the nil rate band.

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14611

00ec25 · 7 February 2018 at 10:50PM

getmore4less wrote: »

That is not what the HMRC manual says for gifts below the nil rate band.

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14611

that is not actually the best link. Look at the cumulation rules for the full technicalities (which i was not going to go into since that is not the point of this thread)

https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14502

Terminal disease, IT and buying a shared ownership

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