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  • FIRST POST
    • Alan Cross
    • By Alan Cross 19th Apr 17, 8:50 PM
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    Alan Cross
    Giving it all away to avoid care costs
    • #1
    • 19th Apr 17, 8:50 PM
    Giving it all away to avoid care costs 19th Apr 17 at 8:50 PM
    This is an academic question but I hope someone knows the answer!

    What is the position with regard to local authority help with care costs if you have, in effect, given away most of your estate - house, savings etc. - to, for example, the kids?

    I seem to remember that there is some kind of 'waiting period' like seven years before they recognise that the stuff genuinely belongs to someone else but I may be thinking of HMRC and Inheritance Tax.

    I am not actually intending to do this but would appreciate being put straight by anyone in the know.
Page 1
    • Nick_C
    • By Nick_C 19th Apr 17, 8:56 PM
    • 2,955 Posts
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    Nick_C
    • #2
    • 19th Apr 17, 8:56 PM
    • #2
    • 19th Apr 17, 8:56 PM
    http://www.ageuk.org.uk/home-and-care/care-homes/deprivation-of-assets-in-the-means-test-for-care-home-provision/
    Last edited by Nick_C; 19-04-2017 at 9:00 PM.
    • dunstonh
    • By dunstonh 19th Apr 17, 8:56 PM
    • 89,513 Posts
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    dunstonh
    • #3
    • 19th Apr 17, 8:56 PM
    • #3
    • 19th Apr 17, 8:56 PM
    Deprivation of assets is the term.

    I seem to remember that there is some kind of 'waiting period' like seven years before they recognise that the stuff genuinely belongs to someone else but I may be thinking of HMRC and Inheritance Tax.
    That is a potentially exempt transfer for IHT purposes. There is no 7 year rule on gifts to obtain benefits.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
    • BobQ
    • By BobQ 19th Apr 17, 9:22 PM
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    BobQ
    • #4
    • 19th Apr 17, 9:22 PM
    • #4
    • 19th Apr 17, 9:22 PM
    Yes there is no 7 year rule on gifts to obtain benefits,

    You are entitled to give away your money and assets but the Council will make an assumption that not a normal thing to do so will assume that you have deliberately deprived yourself of the assets. The onus is on the Council to prove it was deliberate but in practice they will expect you to give a good reason for what you did. If they do not accept your reasons, they will treat you as if you still had the assets when doing a financial assessment. If the person you gave the assets to still has them they may pursue them for the money.

    Quite rightly they will take action if they think you have done this to avoid benefits. But it depends on what you have done, for example if you have shared a house with someone else for many years and the house is in your name transferring it to joint ownership might be acceptable if you had no idea that you were likely to need care, but doing it a few weeks before you go into a care home would not.
    Last edited by BobQ; 19-04-2017 at 9:29 PM.
    Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.
    • AnotherJoe
    • By AnotherJoe 19th Apr 17, 10:30 PM
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    AnotherJoe
    • #5
    • 19th Apr 17, 10:30 PM
    • #5
    • 19th Apr 17, 10:30 PM
    Putting it in a trust fund with a certain wealth company seems to be an efficient way of putting it out of reach of everyone, from what I read
    • Alan Cross
    • By Alan Cross 19th Apr 17, 10:32 PM
    • 1,124 Posts
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    Alan Cross
    • #6
    • 19th Apr 17, 10:32 PM
    • #6
    • 19th Apr 17, 10:32 PM
    Putting it in a trust fund with a certain wealth company seems to be an efficient way of putting it out of reach of everyone, from what I read
    Originally posted by AnotherJoe
    Yes, I've also heard about trusts but I think it's just a tax thing, rather than anything to do with care costs, no?
    • PasturesNew
    • By PasturesNew 19th Apr 17, 10:34 PM
    • 60,667 Posts
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    PasturesNew
    • #7
    • 19th Apr 17, 10:34 PM
    • #7
    • 19th Apr 17, 10:34 PM
    If you self fund, you go in when YOU need to/when YOU choose.
    If you self fund, you go in WHERE you chose.

    If the state pays you get put in as late as possible, long after the time when it would've been better for you.... it'll be traumatic and at very short notice, without you choosing anything about "where" you're put. In short, the first bed that's available in one of the homes that has a Council Account on their books.

    Your money buys you choices....
    • westv
    • By westv 19th Apr 17, 10:39 PM
    • 4,349 Posts
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    westv
    • #8
    • 19th Apr 17, 10:39 PM
    • #8
    • 19th Apr 17, 10:39 PM
    If anybody here wants to give it all away I'll be happy to assist.
    • BobQ
    • By BobQ 20th Apr 17, 12:17 AM
    • 9,788 Posts
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    BobQ
    • #9
    • 20th Apr 17, 12:17 AM
    • #9
    • 20th Apr 17, 12:17 AM
    Putting it in a trust fund with a certain wealth company seems to be an efficient way of putting it out of reach of everyone, from what I read
    Originally posted by AnotherJoe
    These are generally scams since they cannot protect you from deprivation of assets. If you give money to your friend or give it to a trust the result is the same , it is not your money and you have deprived your self of an asset.

    Trusts work when you plan them well in advance so you can plausibly say it was not deliberate deprivation, but since most people do not go into care homes giving your assets to a trust means that you will most likely lose control of what you can do in the future and there may be other unforeseen consequences. .
    Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.
    • Sea Shell
    • By Sea Shell 20th Apr 17, 6:55 AM
    • 413 Posts
    • 397 Thanks
    Sea Shell
    If you self fund, you go in when YOU need to/when YOU choose.
    If you self fund, you go in WHERE you chose.

    If the state pays you get put in as late as possible, long after the time when it would've been better for you.... it'll be traumatic and at very short notice, without you choosing anything about "where" you're put. In short, the first bed that's available in one of the homes that has a Council Account on their books.

    Your money buys you choices....
    Originally posted by PasturesNew
    I agree 100% with this. Why would you want to give all your money away so that you could end up with rubbish end of life care. They'll only come after your family for top-up fees to get you a better room with a view anyway....assuming you don't want to be shoved in the broom-cupboard.

    People seem obsessed with making themselves paupers in later life, to stop LA's getting their money.

    Cutting of your nose to spite your face, comes to mind.
    " That pound I saved yesterday, is a pound I don't have to earn tomorrow "
    • Malthusian
    • By Malthusian 20th Apr 17, 9:52 AM
    • 3,280 Posts
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    Malthusian
    These are generally scams since they cannot protect you from deprivation of assets. If you give money to your friend or give it to a trust the result is the same , it is not your money and you have deprived your self of an asset.
    Originally posted by BobQ
    Well, I could give my house to my friend and if I had a good reason for doing so and it wasn't done in anticipation of needing care, that's not deliberate deprivation. It's important to understand that there are no rules or taxes against making gifts.

    The thing is that most people wouldn't give their house to their friend because their friend will want them to clear out of their nice new house. Or pay rent at market rates.

    The scam arises when you tell someone that you have a marvellously clever scheme whereby you trustulate their house ("trust" works as a magic word in the same way that "God" does in religion, i.e. it explains everything but you're not allowed to ask how). The house is then no longer yours (and thereby you no longer have to sell it to pay for care) but you still get to live in it. You don't own it but you retain all the advantages of owning it. How? Trust! Derp.

    The best case scenario is that when the time comes the council will look through this pack of horse---- and you will have to sell your house. The worst case scenario is that you won't be able to sell the house because you gave it away to the guys who arranged the "trust" and they have mysteriously disappeared out of the country, so you have no council funding and no money of your own either.
    • TcpnT
    • By TcpnT 20th Apr 17, 11:11 AM
    • 38 Posts
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    TcpnT
    There was a program on radio 4 this weekend on the subject. "The Care Fee Trap". http://www.bbc.co.uk/programmes/b08m8q7z.

    Investigating companies claiming to be able to do this using a trust.
    • mgdavid
    • By mgdavid 20th Apr 17, 11:52 AM
    • 5,244 Posts
    • 4,426 Thanks
    mgdavid
    ........ The worst case scenario is that you won't be able to sell the house because you gave it away to the guys who arranged the "trust" and they have mysteriously disappeared out of the country, so you have no council funding and no money of your own either.
    Originally posted by Malthusian
    rather depends on who the trustees are surely. If it's two of your children (or other trusted close relatives) plus optionally your family solicitor then there shouldn't be too many problems.
    A salary slave no more.....
    • xylophone
    • By xylophone 20th Apr 17, 12:00 PM
    • 23,387 Posts
    • 13,593 Thanks
    xylophone
    http://www.thisismoney.co.uk/money/news/article-4422982/Councils-demand-elderly-pay-care-fees-clawing-cash.html


    Some discussion here

    http://www.aprilking.co.uk/2017/01/30/deprivation-of-assets-guide/
    • Spelunthus
    • By Spelunthus 20th Apr 17, 12:00 PM
    • 60 Posts
    • 68 Thanks
    Spelunthus
    You have enough to manage now, and maybe a bit left over in your estate.
    You are considering "Giving it away" so that you may live on with Local Authority care, rather than spending the money on your old age. This LA provision will be basic, and paid for by ALL OF US, at the expense of the truely needy.

    I think you should pay for it yourself and don't be so selfish.
    • Malthusian
    • By Malthusian 20th Apr 17, 12:42 PM
    • 3,280 Posts
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    Malthusian
    rather depends on who the trustees are surely. If it's two of your children (or other trusted close relatives) plus optionally your family solicitor then there shouldn't be too many problems.
    Originally posted by mgdavid
    That was the best case scenario I was referring to.
    • wotsthat
    • By wotsthat 20th Apr 17, 3:50 PM
    • 11,065 Posts
    • 19,892 Thanks
    wotsthat
    If someone has money they don't need and quite like the thought of a nice council care home they need to start giving away money immediately. A council is hardly going to come after you if you've gifted £4k to each of your kids since your early 40's i.e. about 40 years before you need care. That takes care of £500k.

    That won't happen because someone who would rather live in a council home to save money doesn't sound like someone who gives money away as an option. They'd probably leave it too late.
    • lovinituk
    • By lovinituk 20th Apr 17, 3:56 PM
    • 5,371 Posts
    • 6,038 Thanks
    lovinituk
    Both my grans ended up in care homes. One had money, one didn't. The one who had money lived a lovely last few years in a fantastic home with amazing staff. Not much left to hand down but nobody in the family cared because she lived out her life in the best way possible.

    The one without money had so many issues with the council home she ended up in, it nearly put her daughter (my mum) in an early grave.

    I know which one I'd rather end up in!
    • Silvertabby
    • By Silvertabby 20th Apr 17, 6:41 PM
    • 1,778 Posts
    • 2,149 Thanks
    Silvertabby
    Both my grans ended up in care homes. One had money, one didn't. The one who had money lived a lovely last few years in a fantastic home with amazing staff. Not much left to hand down but nobody in the family cared because she lived out her life in the best way possible.

    The one without money had so many issues with the council home she ended up in, it nearly put her daughter (my mum) in an early grave.

    I know which one I'd rather end up in!
    I did a tour of some local care homes with my friend, when she was looking for a place for her mum. The council homes had shared bathrooms and, in some cases, shared bedrooms. The private homes, however, were more like luxury hotels with lovely private bed sitting rooms with en-suite bathrooms.
    • AndyAdams
    • By AndyAdams 20th Apr 17, 7:01 PM
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    AndyAdams
    To put the other side of the argument, both of my grandmothers ended up in the same care home at the same time. One was 100% funded by the council the other had to pay her care fees as she had a home. The home was sold to pay for the care home fees.

    I just feel that doesn't seem particularly fair.
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