Help with Parent's money

Claire14

I have elderly parents who sold their home and went into Sheltered accommodation. We have the lumps sum to deal with and now Mum may need nursing home care.
The lump sum is under the threshold for IHT.

1. How much can we legally give away to whittle the lump sum down? Does it matter if the total is under the threshold for IHT?
2. If I put money in mums name separately, is Dad still liable to pay for care out of his pot when hers is whittled down?
3. Can they give it all away to children now as a pre-death legacy?

Will anybody check?!!!
We dont want to do anything illegal, but we would like to protect some of their money from all going on care home fees!

BTW in my next life I'm going to have a care home- very lucrative business I reckon!

any advice appreciated
Claire:)

anmarj

not sure about much about the other questions, but if money is given away it can be classed as deprivation and your mum could still be treated as having that money, a lot of people confuse the "I can give away £xxx per year to whittle it down" and don't realise that, that side of things don't come into it.

McKneff

No, you cannot whittle it down.

Google 'deprivation of assets'

Do you realise that by trying to get information as to how to get the council to pay for your parents care,
You are asking the very people who would be paying it. Now come on......................

dzug1

Unless you have Power of Attorney YOU cannot give anything away at all.

If you do have Power of Attorney you should not give anything away that your parents were not in the habit of giving before the Power of Attorney - eg small gifts for birthdays and Christmas. Depending on their finances maybe not even that.


BTW in my next life I'm going to have a care home- very lucrative business I reckon!

Loads of small care homes are closing because they cannot make enough money. The costs of running one are enormous.

welshmoneylover

Claire14 wrote: »

I have elderly parents who sold their home and went into Sheltered accommodation.

We dont want to do anything illegal, but we would like to protect some of their money from all going on care home fees!

Who do you propose should pay the care home fees?

monkeyspanner

Hi Claire
I hope you are thick skinned this type of request for information usually attracts some very negative comments.

Essentially you need to look at this from two perspectives.

From an IHT perspective your parents can give away as much as they like. There are certain anual gift allowances which in the event of death the Inland revenue will ignore. All gifts above these limits are viewed as PETS (potentially exempt transfers) and these will fall entirely outside an indivduals estate after 7 years and there are reductions in the liability after some of these 7 years have passed. It will be the executors responsibility to account for any gifts madde during the 7 years prior to death and pay the IHT liability, so you should keep a record. There is a small anual allowance of I believe £300 to each of as many people as each parent likes but if making larger gifts to an individual the £300 will be counted as part of the larger gift.

The other perspective is the fact that your mum may need care. The council social services department will be liable to assist when any individuals savings reaches the lower savings limit of £23500 (in England). So if by giving away assets an individual qualifies or may qualify in the future for council assistance any gifts could be considered as a "deliberate deprivation of assets". The council when required to assist can look for these gifts as far back as they like (there is no time limit) and can recover the gift from the recipient for a period of 6 months after the gift. It is unlikely that the council will try to force recovery they will more likely assess as though the person needing assistance still had the asset. So you need to consider by giving the gift will this require the council to assist with care home funding. If there is masses of capital or an income which will cover the care home fees then you probably don't need to worry as your Mum will be self-funding otherwise I would avoid gifts made by your Mum. If there is no reasonable visibility of your Dad needing care now then he could consider making gifts. However I would advise keeping these assets to buy a better level of care in the future.

Your Dad is not required to assist with care home fees and he does not need to declare any income or assets in relation to your Mum's care home fees. If there are joint assets it would be wise to separate them if feasible it will make financial assessments more strightforward.

If your mum needs/wants a care home which costs more than the councils maximum support level and she has less than the lower savings limit the council may suggest a move to a care home that will provide care at their standard support level. Or they may ask for a 3rd party top-up to make up the difference. Your Mum is not allowed to pay this and it will be down to your family to decide if they can fund the top-up.

A good place to start lookind at care home funding is here;
www.counselandcare.org.uk have a look at their fact sheets.

Your mum could consider an immediate care needs annuity. For a one off capital investment the insurer will pay an income for life. Obviously as an anuity the capital is gone once invested but the uncertainty is solved.

As your Mum may need a care home I assume her health is getting worse. It may be worth you looking at applying to the PCT for NHS funded continuing healthcare (CHC) this is non-means tested but does require your Mum's needs to be primarily medical. It is extremely hard to obtain this funding. There is a long thread on this forum for CHC.

In any case your mum should be likely to obtain Attendance Allowance which is also non-means tested and would continue whilst self-funding in a care home.

Hope this helps.

scotsbob

Claire14 wrote: »

Will anybody check?!!!

You bet they will.

Remember all those laws that the UK government passed "to prevent terrorism" well one of them gives your local council officials access to every bank and building society account in the UK. They can search the details of bank accounts as easily as you can search on Google.

Newly_retired

I wonder what your parents want? What did they have in mind when they sold their house and moved into sheltered accommodation ( presumably rented)? Did they think they would be well enough to manage there for some time yet? Has your mum suddenly got worse?

Is it possible that your mum's care needs could be catered for by carers coming in to the home on a daily basis, to avoid the trauma of separation and going into a care home? Surely your parents would be happy to pay for this care out of their lump sums? There are many agencies that supply such carers - you can choose. Your mum sounds as if she may be entitled to Attendance Allowance to help pay for this, as it is not means tested.

If she is seriously ill and has major medical needs then that care should be covered by CHC from the NHS. Hard to get and many deserving cases do not manage to get it.
If you are wanting tax payers to pay for care home fees when your parents have a good amount of money, why?
My mum spent her last 7 months in a care home, self-funded. She chose it after dad died and was very happy there. OK, so I inherited about £12k less, but I am glad she was looked after and safe and comfortable.
She gave away various gifts during those months with no worries about any consequences - ie there was no fraud, no deprivation of assets, no IHT to worry about etc.
Your mum will not need to pay care fees once her capital is down to around £23000. That is still a decent amount to inherit, by any standards.
And don't worry about IHT as they are below the threshold.

margaretclare

BTW in my next life I'm going to have a care home - very lucrative business I reckon!

I doubt it. I have known some 'care homes' that were in big old houses. Given modern regulations about every room having en suite facilities, the fire regulations, the staffing requirements, it is not a game I would ever contemplate.

Errata

Newly_retired wrote: »

Your mum will not need to pay care fees once her capital is down to around £23000. That is still a decent amount to inherit, by any standards.
And don't worry about IHT as they are below the threshold.

Just a slight correction. Around £23000 is when the LA starts to contribute towards the weekly care home fee. This contribution tapers until around £12000 is reached, at which point the LA's contribution covers all the weekly fee.

littlemissbossy

Errata wrote: »

Just a slight correction. Around £23000 is when the LA starts to contribute towards the weekly care home fee. This contribution tapers until around £12000 is reached, at which point the LA's contribution covers all the weekly fee.

Also watch out for the third party top up amount, that can be quite an amount.