Inheritance and care home fees

AlanF

I don't know if I need to see a solicitor or accountant or if there is a simple answer to my question. My mother in law has now gone permanently into residential care. She has limited (but some) mental capacity and my wife's sister has power of attorney. She has 3 children (my wife, my wife's sister who has POA, and my wife's brother). Her husband died last year.

She has an estate worth approx 130-150K, and is paying for her own residential care because of this. She has just had to sell the house (this figure includes the house sale).

I am sure it is illegal for her to gift this money to her children to avoid her having to pay care home fees. However, I did understand that there was a certain amount per year that someone can gift away legally without it being fraudulent. Is this the case? Or do we just accept that she continues to pay for care home fees until she is down to the 30K threshold (or whatever it is that the Local Authority sets)?

It all seems rather frustrating as over the last 10 years she and her husband made several sacrifices in their lifestyles, including foregoing holidays, because they wanted to make sure their children got as much as possible from the estate. I did tell them at the time while they were healthy to enjoy their lives and their money because the Chancellor would make sure one way or another that we would get very little! She lives a long way away and declined to move in with any of her children.

Thanks

Alan

Catti

I am afraid there are very strict rules of the Deprivation of Assets to avoid these costs and giving the money away simply isn't an option. Furthermore, your S-I-L as Attorney is only permitted to give gifts on behalf or her Mum which are in keeping with the size of her estate and her normal practice.

This may help you http://www.housingcare.org/information/detail-2338-deprivation-of-assets.aspx

margaretclare

She has an estate worth approx 130-150K, and is paying for her own residential care because of this. She has just had to sell the house (this figure includes the house sale).

Put it another way: who does she imagine is going to pay for her own residential care, if she does not?

I am sure it is illegal for her to gift this money to her children to avoid her having to pay care home fees.

You're absolutely right - it is.

t all seems rather frustrating as over the last 10 years she and her husband made several sacrifices in their lifestyles, including forgoing holidays...

It seems a pity that they didn't look on this as 'saving for a rainy day' and in MIL's case, the rainy day has now arrived.

I often hear this kind of argument (the kind that MIL is putting forward) and it's not one that I can comprehend.

the_gronows

It is illegal to give money away to AVOID care fees. However she does not have any duty to maintain her capital to pay care home fees either.

So if she has any children or grand children she would like to buy gifts or give cash for their birthdays or wedding etc especially if she has done so in the past. Also she can buy things for herself.

She can reasonably reimburse her daughter any expenses incurred in respect of POA, help her children out with their petrol costs in coming to see her etc.

Errata

Sorry - it isn't illegal. If a local authority consider that someone has deliberately deprived themselves of assets in order to avoid paying their care home fees it will assess the person as still owning them.
Lots of accurate info on deprivation of assets on the Age Concern and Help the Aged websites.

pattycake

My attitude is that the old person in question has worked hard and saved so their money should be used for their benefit. Not to be passed on as an inheritance. Her money will ensure that she is housed in much nicer condtions than would otherwise be the case if the state was picking up the bill.

My father is 86 and currently living independently but if it was necessary for him to have to go into a care home, I would be very happy that his savings made him as comfortable as possible in his remaining years.

sloughflint

pattycake wrote: »

My attitude is that the old person in question has worked hard and saved so their money should be used for their benefit. Not to be passed on as an inheritance. Her money will ensure that she is housed in much nicer condtions than would otherwise be the case if the state was picking up the bill.

My father is 86 and currently living independently but if it was necessary for him to have to go into a care home, I would be very happy that his savings made him as comfortable as possible in his remaining years.

Here we go again.

The OP was quite clear in what information he was asking for and more importantly who it was for.

Other people's opinions on the mother's preferences are quite irrelevant.The lady is hardly likely to change her mind now:

AlanF wrote: »

It all seems rather frustrating as over the last 10 years she and her husband made several sacrifices in their lifestyles, including foregoing holidays, because they wanted to make sure their children got as much as possible from the estate. I did tell them at the time while they were healthy to enjoy their lives and their money because the Chancellor would make sure one way or another that we would get very little! She lives a long way away and declined to move in with any of her children.

The only practical suggestion I can make Op, is for you to explore the possibility of an immediate care annuity.

It might offer your MIL some peace of mind knowing that there's a good chance that some money could be left over and also to you knowing that your MIL has greater choice in what care home she will live in.

Some info here:
https://www.hsbcpensions.co.uk/nhfa/pages/index.asp

Biggles

the_gronows wrote: »

It is illegal to give money away to AVOID care fees. However she does not have any duty to maintain her capital to pay care home fees either.

So if she has any children or grand children she would like to buy gifts or give cash for their birthdays or wedding etc especially if she has done so in the past. Also she can buy things for herself.

She can reasonably reimburse her daughter any expenses incurred in respect of POA, help her children out with their petrol costs in coming to see her etc.

Now that PoA is involved she can't do any of these things unless they are comparable with the amounts she had already been giving. The Office of the Public Guardian would not be impressed if, instead of giving £10 for birthdays, she started giving £100, for example, or she started paying petrol money when she had never done it before. Her daughter now has a legal duty to be responsible in her use of her mother's money.

From personal experience, I would endorse Sloughflint's suggestion of an Immediate Care Needs Annuity. This will mean a one-off hit on her finances, but would preserve the rest of her capital for the remainder of her life. Not just as an inheritance, but in order that there is no danger of her funds running out and having to move to a council-funded care home when she might prefer to stay where she was. The link in his post will get you quotes at no cost.

AlanF

Many thanks for all the advice and the helpful links. I know where we stand as a family now! Thanks in particular to Sloughflint for the advice which was particularly pertinent!

I realise this is a moneysaving, and not a political forum, so was slightly surprised at the depth of feeling in terms of the moral rights and wrongs of the issue!

I actually feel that the moral arguments are not quite as black and white as has been suggested. There is a grey area between what constitutes illness requiring hospital or nursing care (which the state pays for) and what constitutes social care. Is Alzheimer's disease an illness, or simply a consequence of ageing? In some LAs, and in all of Scotland, my MIL's care would be paid for by the state. In addition, whether a person pays for their own care, or has it paid for by the state, the care is identical (i.e. my MIL's care home has a mixture of self-paying and state-paid residents, all of whom receive identical care).

Thanks again!

Alan

dupplin

The rules regarding this are quite firm and established. Giving the money away would be a considered a deprivation of asset. However your MIL can make gifts as part of her normal expenditure, providing they are not 'unusual'. If a power of attorney is in place then any gift outside of normal expenditure would also require the consent of the court of protection.

At this level of assets, depending on your MIL's other income, the capital would not last very long, I pressume the capital is being eaten into to pay for the care home.

Give serious consideration to speaking to an IFA, they can give you some options not available on a DIY basis, particularly long term care policies. Try looking here

http://www.fundingcare.org.uk/LTCi/ltic.html

to see how they work and the advantages/disadvantages.

SandC

AlanF wrote: »

Many thanks for all the advice and the helpful links. I know where we stand as a family now! Thanks in particular to Sloughflint for the advice which was particularly pertinent!

I realise this is a moneysaving, and not a political forum, so was slightly surprised at the depth of feeling in terms of the moral rights and wrongs of the issue!

I actually feel that the moral arguments are not quite as black and white as has been suggested. There is a grey area between what constitutes illness requiring hospital or nursing care (which the state pays for) and what constitutes social care. Is Alzheimer's disease an illness, or simply a consequence of ageing? In some LAs, and in all of Scotland, my MIL's care would be paid for by the state. In addition, whether a person pays for their own care, or has it paid for by the state, the care is identical (i.e. my MIL's care home has a mixture of self-paying and state-paid residents, all of whom receive identical care).

Thanks again!

Alan

Alan, the state does provide financial assistance towards nursing home fees based on the level of care required by the person in the home. I believe this is works in a three tier system with A being the highest. For info my father is classed at this level (basically means he needs 24 nursing care and his condition will not improve) and my stepmum tells me that approx. 1 week out of 4 is then paid for direct to the home by the NHS and we pay for the rest. I think it's a yearly thing then our bill is worked out pro rata but she reckons it's worth about a week.

I'm not sure if it's connected with whether the person concerned still has a spouse or not but they also receive a proportion of the winter fuel allowance even if they are in a care home. Think it's 50%.