tax on gift of cash from my grandma

robincricket

My Grandma wants to give her four grandchildren a gift of cash of £10k each, can she do this without paying any sort of tax? She has this money as she has sold her house and moved in with my mum, my gran owned a 3rd of the house and now has total savings of £67k, therfore she is well under the £325k inheritance tax limit. I dont think capital gains tax will be an issue either as she is giving cash not an asset and the money was from her only home.

At the moment my gran does not need to go into a care home, but if she does in the future, will giving away £40k to grand kids be an issues, will we the grandchildren have to pay this back, or will anyone need to pay any sort of tax. Can my gran give her grandchildren a gift of £10k each?

Any advice will be appreicated

MrsManda

If your gran needs to go into a care home then the Local Authority is likely to be able to claim delibrate deprivation of assets. I think factors around whether they will be able to claim deprivation of assets include how likely it is she'll need a care home in the next few years considering her current age and state of health and how long after she gives away the money she does require a care home.
Of course with the new government the rules around care home funding is likely to change so nothing is certain.

If the LA does successfully say that she falls under deprivation of assets they will assess her as if she still has those assets. Legally the money will belong to the grandchildren so they won't have to pay it back but morally if your gran needs the money to fund her carehome it'd seem terrible if her grandchildren didn't help.

RayWolfe

No one knows what tomorrow will bring.
A statement of the obvious but ...
Your Gran may need this money in the future. If she has money, she should not have to rely on "minimum" council funding should she need care and if she doesn't, the money is still there when she dies and you can have it then.
You are correct, there are no tax issues but there are council care issues.
Essentially, think of your Gran first and you last.

Mojisola

She may change her mind about giving money away if you take her round a few local care homes. She can then decide whether she wants to keep the money so that she will have a choice about where she goes if she does ever need to.

Most people don't go into care homes so she could make provision for the grandchildren in her will. If she hasn't needed the money, they can have it then.

robincricket

Dear All,

Thank you for your advise. My grans plan is to live her days out at my mums house and has had the house changed to suit her needs, (stair-lift and other bits) My mother is an early retired nurse who plans to take care for her, when and if she needs any help, I note my gran is fit and healthy presently.

I have taken on board the advise about the standard of care homes, I will tell my gran and see what she wants to do.

thanks

Mojisola

robincricket wrote: »

Dear All,

Thank you for your advise. My grans plan is to live her days out at my mums house and has had the house changed to suit her needs, (stair-lift and other bits) My mother is an early retired nurse who plans to take care for her, when and if she needs any help, I note my gran is fit and healthy presently.

I have taken on board the advise about the standard of care homes, I will tell my gran and see what she wants to do.

thanks

Have you heard the saying that if you want to make the gods laugh, tell them your plans?

Tuesday_Tenor

Just some thoughts ...

'A survey published by Saga recently estimated that average care home bills are around £540 a week. The average stay of a person in a care home is four years, so over the average stay costs would come in at around £112,000 per person'.

On the one hand, you seem to have future care needs sorted within the family. So, all being well, gran won't need to use her savings for care. Or she may need to just use a little for a few weeks/months, or some for enabling some respite care for your mother. (Caring 24 hour/7 days week can be VERY tough).

On the other hand, who knows what may happen. Mother and gran may fall out after living together 5 years; 4 years later gran may need care for 3 years ... or .... Your mother may become ill before your grandmother ....

Reducing 67K to 27K leaves gran rather close to the level (22K) at which Local Authority has to pay, and therefore (quite rightly) look into the deprivation of assets issues.

If this was my family (and we have been in a similar-ish position) then I think gran would compromise on giving away 4x£5000 leaving £47,000 which is is more than enough to cover expected care fees (virtually nil) AND would also cover a couple of years of UNexpected care fees.

Just a personal view ...

John_Pierpoint

one woman in 3 and one man in 5 ends up needing a care home, I believe.

askakd

John_Pierpoint wrote: »

one woman in 3 and one man in 5 ends up needing a care home, I believe.

seems very high to me - assuming 60m population then that would mean 10m women and 6m men in care homes...

id be interested in seeing the basis for this belief!

margaretclare

askakd wrote: »

seems very high to me - assuming 60m population then that would mean 10m women and 6m men in care homes...

id be interested in seeing the basis for this belief!

I don't think the proportions are anything like as high as this, but someone may come along with better - more accurate - information.

p00hsticks

askakd wrote: »

seems very high to me - assuming 60m population then that would mean 10m women and 6m men in care homes...

id be interested in seeing the basis for this belief!

You make it sound like you think there are 16 million people in care homes now - don't forget that only around 5 million of that population are over 75 at the moment.....