Giving away money when older

occasions21

My mother who is over 90 no longer has control of her finances and lives in a Care Home, fees paid for by pension and interest on savings.
There will be three beneficiaries of her will, at present each would receive about £60,000 (well below IHT). Is it acceptable to distribute that money now whilst continuing to pay the Care Home fees (hopefully for some years)?
Is there any tax liability for those receiving the money or is it just part of her Estate to be assessed when she dies?
I wish to stress that there is no intention to claim from the State for herv fees at any time.

tanith

But if she gives her savings away do you know that there will be enough pension/interest left to keep paying for her care?

p00hsticks

occasions21 wrote: »

My mother who is over 90 no longer has control of her finances

So who does ? If some one (e.g. a relative, solicitor or the care home) has Power of Attorney for her finances, then they are tightly restricted to always act in her best financial interests (which is never going to include giving her money away...)

occasions21

The beneficiaries would pay a proportion each + the pensions, which would not be affected.

Also, at the moment, there is a shortfall each month which has to be made up by additional funds from a beneficiary.

The P.O.A. is with two of the beneficiaries of her will which from what you are saying may be considered not in her best interests.

However, with interest on savings so poor, we can't see any other way to ensure that her fees are paid for the forseeable future.

John_Pierpoint

Her attorneys have the power to use her capital as well as the interest to fund her care?!
They don't have the power to make gifts on her behalf; this comes up when the family, of rich elderly people, decide it would be a good idea to do a bit of Inheritance Tax Planning, even if it is only utilising the annual £3K gifts allowance.

hamburger

Do all children get £3k gift or is is £3k divided by number of children?

Annisele

Hamburger - £3k total - see HMRC's guidance (and not just to children, to anybody).

To the OP - looks like the attorneys need to find out more about their rights and responsibilities. I can't see that they can possibly argue that giving your mother's money away is in her best interests - but on the other hand I'd be astonished if the PoA was drafted in a way that didn't let them use her capital (if it is, get it changed!).

dzug1

Attorneys do not have the power to make gifts on the scale indicated without authority from the OPG - which would not normally be granted.
However the mother can make them herself - the PoA does not take away her right to manage (part of) her own affairs if she so wishes.

The £3K allowance is irrelevant in this case as the estate is well below the IHT threshold

sleepless_saver

Have you considered an immediate care needs annuity to solve the problem of meeting the cost of fees for the foreseeable future?

John_Pierpoint

We are assuming that the mother is still compos mentis.
Surely http://www.nhfa.co.uk/CareFeePlans.html is just placing a bet with a financial institution on how long mother will live.
Though the payout is "tax free" I doubt the underlying fund is???
Sadly people in care homes don't have high life expectancy.

pablowest

Hi John, Your link is really nice. I think that the financial institution will provide you financials.