House selling.

diva84

My mother who is 86 has recently moved into sheltered accommodation and would like to sell the family house and divide the money between myself and my four brothers. We have been told that she is not allowed to gift the money from the sale of the house to her children,but she must spend it on herself. And at 86 years old she cannot imagine spending all that money on herself. Also we have recently been told about the 7 year rule, not sure what that entails. And does anyone know how much she is allowed to keep without effecting her benefits. Is there anyone out there that can advice us of any of the above.:mad:

Fire_Fox

Why are you using the mad smilie?? I would want my parents to spend the money they have worked hard for making their final years as comfortable as possible. You will not get the same standard and level of care from the state as you would going private for at least some services, and you will have to fight at every stage. Nobody expects her to spend all of the equity: she can gift the remaining money to her children in her will.

Run a search on 'deprivation of assets' or 'deprivation of capital' - how much money varies depending upon the specific means-tested benefit or service applied for. By giving money away in order to claim benefits or services your mother will be treated as if she still had the full amount in her bank. She would have had to have gifted the house to her children at least seven years prior to needing any care or benefits in order for this to not apply.

googler

This thread re-inforces the case for elderly folks to put their affairs in order earlier rather than later.....

Power of Attorney so that family members or others can act for them if they lose capacity to do so themselves.

A valid will, so there's no doubt or argument over who gets what.

Sounds like both would be advisable for Mum if not done already. Sounds like they should have been considered when mother was in her late 70s, unfortunately....

As far as I recall, she can gift £3000 pa to relatives without penalty, but check with DWP websites etc.

Thrugelmir

Are you hoping to sell and divide the proceeds of the home to avoid paying towards the cost of sheltered accomodation?

As thats how your mother will be spending money on herself.

You should arrange to sell the family home and invest the proceeds in the best way to maximise the income / capital return to provide your mother with the money she requires to enjoy her latter years.

The 7 year rule is as follows:

Under the Seven Year Rule if a gift is given to someone and the benefactor lives longer than seven years from the donation of that gift no inheritance tax will be payable. If the benefactor dies within seven years inheritance Tax will be payable if the value of the deceased persons estate exceeds the £300’000 threshold. Gifts can be made with a view to taking advantage of this rule and will be a lot safer if the person who gives the gift is married as if this is the case and both partners in the marriage are domicile in the UK at the time of death the estate will be passed on to the surviving partner (non-domicile partners will be exempt from the tax up to a limit of £55’000). For obvious reasons the Seven

year rule can never be a relied upon as a means to avoiding inheritance tax. However, as a means of avoiding incurring inheritance tax on large donations it is well worth considering. Above all, remember there is nothing to lose, although if the receiver of the gift has counted on not having to pay inheritance tax there could be a double shock if the deceased passes away early. Never rely on the Seven Year Rule as a means ensuring financial security.

diva84

The reason I used the mad smile is purely because this issue regarding my mum house has been going on for quite a while, and I have been given alot of different advice from friends/family to the point I feel at times I am going a little stir crazy, so sorry if this silly logo offended you in anyway, but thanks for the advice.

Thrugelmir

diva84 wrote: »

The reason I used the mad smile is purely because this issue regarding my mum house has been going on for quite a while, and I have been given alot of different advice from friends/family to the point I feel at times I am going a little stir crazy, so sorry if this silly logo offended you in anyway, but thanks for the advice.

Doesn't offend. But to a neutral observer you read the tone of the post in a different way to the one I'm sure you intended to convey.

bitsandpieces

Who advised your mum that she can't give away the money? Is this an issue around local authority funding of care? Power of attorney? Competence to make this type of decision? Or something else?

Worth remembering that, at 86, she might still live a lot longer. And costs for private care can really add up...