Inheritance Advice Required

Martinslovechild

Hiya,

My Father is 74 and lives on his own. We recently had a conversation regarding his property; He's worried that should he require long-term care in the future, he doesn't want to see his property effectively taken away to pay for the care and would prefer to plan ahead to ensure that my Brother & I are able to benefit through inheritance.

The property is his only asset and is currently worth approximately £240,000.

One of his suggestions is to hand the property over to my brother & I now such that we become joint owners and my father lives there, effectively rent-free. My own (possibly incorrect) understanding is that the Inland Revenue wouldn't like this arrangement as they would expect my Father to pay an amount of rental to us equivalent to the market-average for the size & location of this property.

In addition, I'm unsure whether the 7-year rule still exists, i.e. if my Father were to gift the property to us at this stage and he then survives for a further 7 years, could the Social Services still have an interest in the property after that time?

Does anybody know the answers to these questions or have any other advice regarding what could be done at this stage to plan ahead to ensure that he is able to maximise the amount of inheritance?

Many Thanks.

margaretclare

No, this won't work. This idea has been discussed on Martin's site under many titles: do some searches using keywords and you'll come up with reams and reams that have been written on this topic.

It's not an idea that I have much sympathy for - I am your Dad's age, married for the second time, and I don't regard anything that I own as someone else's 'inheritance'.

A recent discussion on the Silver Savers board on this site highlighted the fact that 1 in 5 older people might need full-time residential care in the future. That means that 4 in 5 will not, even if they need help to continue living in their own home, and that is the assumption that DH and I work on. Is there a reason why your Dad thinks he might need full-time residential care, or is it just a 'what if'?

TonyMMM

You should google on "deprivation of assets" - this is a complex area where you may want to take professional advice

Martinslovechild

Many Thanks for your responses.

Margaret Clare - it's definitely more of a "What If" at this stage. I think that my Father has arrived at a crossroads in his life whereby he's starting to ask many "What Ifs". In a nutshell, recent events have triggered these concerns and as he's a person who likes to plan things ahead, he's simply attempting to ensure that all the various boxes are ticked in his mind.

TonyMMM - I'll be sure to check out Google.

Oldernotwiser

You need to forget about the "7 year rule" for benefits purposes; it only relates to IHT.

Why not reassure him that you don't regard this money as your inheritance and that it will be used to fund the very best of care for him, should he require it in the future.

Publicly funded care can be sadly lacking in both choice and facilities and most people with financial backing would be much better funding private care.

emlou2009

i'm sorry but these things really annoy me - why should he not pay for his own care should need it if he has the means to pay for it

a neighbour of my dads has a house which has now been empty for 6 years because she got taken into care 6 years ago, many years before that when was first diagnosed with her illness she added her son to the deeds so they cant touch it to pay for her care. so she has a house in a VERY affluent area, probably worth upwards of half a million, and she's had 6 years of residential care for free plus however much more she needs before she dies. residential care isnt exactly cheap for the nhs to provide, they should be allowed to save it for those who need it not have to subsidise people who would be able to fund it themselves but have got out of it on a technicality.

Martinslovechild

Emlou, I'm not here to fire up a debate about whether or not my Father's ethics agree with yours.

I'm quite sure that he would retort that people shouldn't have children unless they can pay for their upbringing entirely themselves, i.e. pay for schooling, pay for hospital fees, no access to child benefits, child tax credit, working families tax credit etc.

Nobody has placed ideas into my Father's head about circumventing fees or taxes - he's 'planning', not 'evading'. He simply wants to ensure that if there are things he can be doing now which will either reduce or eradicate future expenditure/taxes then he's saying that he wants to review and potentially address these now, rather than wait until it's potentially too late.

emlou2009

Martinslovechild wrote: »

He simply wants to ensure that if there are things he can be doing now which will either reduce or eradicate future expenditure/taxes then he's saying that he wants to review and potentially address these now, rather than wait until it's potentially too late.

...which is a fancy way of saying that he has forseen he may need residential care, will have to pay for it as he owns his own property, and is looking to see if he can find a legal way out of paying for it if he can

margaretclare

Oldernotwiser wrote: »

You need to forget about the "7 year rule" for benefits purposes; it only relates to IHT.

Why not reassure him that you don't regard this money as your inheritance and that it will be used to fund the very best of care for him, should he require it in the future.

Publicly funded care can be sadly lacking in both choice and facilities and most people with financial backing would be much better funding private care.

I agree with this.

There was a discussion this afternoon on BBC Radio 4'Moneybox Live' on 'Paying for Care'. In the course of a half-hour programme the aspects that could be covered were of course limited, but you could look at their website or listen on iplayer: http://www.bbc.co.uk/programmes/b0080g47

As this is a 'what if' and, I assume, your Dad is in reasonable health at the moment, the likelihood is that he won't need full-time residential care at any stage in the future. I am the original 'glass is half full not half empty' person, so I prefer to work on the basis that 4 out of 5 people won't need this as opposed to 1 out of 5 will.

Another way of looking at it for your Dad, could be to take a good hard look at where he lives. Is it too big for his needs, is it convenient, easy-care, manageable? In particular, look at the bathroom and the kitchen. Would he be better with a walk-in shower rather than a bath, are there stairs - would he be better to think of somewhere on one floor? If he has to give up driving, is he on or near a bus-route for shopping, doctors, anywhere else that he goes regularly?

He should certainly have made a will, and has he thought about doing a Power of Attorney in case he can't manage his affairs in the future?

You may be sure that DH and I have done all the things I suggest above.

Oldernotwiser

Martinslovechild wrote: »

Nobody has placed ideas into my Father's head about circumventing fees or taxes - he's 'planning', not 'evading'. He simply wants to ensure that if there are things he can be doing now which will either reduce or eradicate future expenditure/taxes then he's saying that he wants to review and potentially address these now, rather than wait until it's potentially too late.

But have either you or your father looked at the situation if he has to go into a home paid for out of public funds? Go and visit a few homes and compare them to what you can get if self funding; it might well change his mind about going down this road!

It really isn't as simple as just trying to get this paid for by somebody else.

carefullycautious

Ok what if you father decided to sell his home and move into a small flat. He used his equity to fund his lifestyle ie holidays/ car etc and maybe giving gifts of money along the way also daily living costs so at the end he had no savings left. What can happen?

Another senario what if your father was a compulsive gambler, drank, etc.?

I think there is a limit on how far back they can actually go when checking bank statements at the time of being assessed. If he used his money for the next few years to live on, well anyone can do what they like with their own money. The problem only occurs if you are at the stage of needing care and then try to dispose of a large sum of money.