Giving away money when older

sleepless_saver

John_Pierpoint wrote: »

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.

Any annuity is a form of bet, and this is simply an extreme form of impaired life annuity. Although average life expectancy in a care home is 2-3 years, some people live a lot longer, and running out of money to pay care home fees can be a real concern. We don't know what the OP's relative's state of health is, and whether it makes sense to plan for the long term or not.

The "underlying fund" would come from the capital she has, which may or may not have arisen from a taxed source.

I'm not suggesting this as the best solution (I looked at it for my own relative and decided against), simply as one other option which could be considered.

[Deleted User]

John_Pierpoint wrote: »

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.

When my wife and I completed Enduring Power of Attorney we were told that it could only start if we were mentally incapable. I think that a court had to agree. Please correct me if I am wrong.

Even if the trustees can make gifts then Inheritance Tax is payable on a tapering % of all gifts (other than 'normal' gifts and £3ooo pa) made within 7 years of her death. Unless you are desparate for the cash it seems best to leave it for what can only be a few years.

If you are desparate then take legal advice on her 'making a loan' which has to be properly documented. Bit too serious for you to act on advice on a forum.

[Deleted User]

occasions21 wrote: »

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.

But you previously said she will be leaving £180,000 in her will.
If it is cash then that is available to pay fees.
If it is a house that you want to keep so as to increase your inheritance then organise a loan on it such Equity Release.

It is dangerous to spend your inheritance before the death. If she is still compos mentis she can alter her will up to her last day.
I know one guy who waited impatiently for his rich uncle to die and was shocked to find he had got religous at the end and bequeathed to the rebuilding of a cathedral.

John_Pierpoint

Deleted_User wrote: »

When my wife and I completed Enduring Power of Attorney we were told that it could only start if we were mentally incapable. I think that a court had to agree. Please correct me if I am wrong.

Even if the trustees can make gifts then Inheritance Tax is payable on a tapering % of all gifts (other than 'normal' gifts and £3ooo pa) made within 7 years of her death. Unless you are desparate for the cash it seems best to leave it for what can only be a few years.

If you are desparate then take legal advice on her 'making a loan' which has to be properly documented. Bit too serious for you to act on advice on a forum.

In the good/bad old days you could buy a form for about a quid from a legal stationer. It acted a power of attorney and lasting power of attorney.
I bought one on the way to the hospital, when my late mother was struck down with a stroke. Leaving her unable to sign a reliable consistent signature and the intellect of a five year in some matters such as money.

It does not solve all your problems as many institutions do not train their staff on how to handle Power of Attorney.
However we blundered through for the next 4 years until she died.

Enduring power of attorney has been replaced by Lasting power of attorney. This requires all sorts of bureaucratic procedures and is a nightmare to set up if the donor is already impaired.
So really all of us should set one up NOW, while it is just a matter of taking weeks to work though the procedures, but without needing to have our level of compos mentis certified etc.