Family loan and what happens if the lender dies / goes into care ?

UKBiker_2

My Grandma recently became unable to look after herself. She sold her house and moved in with my aunt / uncle. She has about £135k in the bank now. She has offered to make me a 'loan' of £20k towards a deposit on a house. (Which she says is mine in her will anyway).

What we can't find out is what happens to that £20k should she need to go into full time care or pass on ? - I know the government takes 40% on inheritance only if the estate is in excess of £300k - which it isn't. But what about full time care ? Would I have to sell the house to repay her estate what's left of the loan ? ... Would rather keep saving myself for the rest of the deposit if its gonna be a legal / tax minefield.


Cheers.
Mark.

sharpy2010

At a guess, and it is just a guess, get £20,000 in cash taken out of her bank and put into your own. This way I suppose you won't have to pay inheritance tax as it can't be proven to have come from any specific source. However, I doubt any bank would let you pay in £20,000 thanks to the plebs of 9/11 and the procedures to stop money laundering put in place after it happened.

UKBiker_2

That's a good idea, but a no go. Its for a house deposit so would have to be via my building society.

sharpy2010

Ah well, was worth a try! Maybe pay for some specialist advice on the best way on handling this legally would be the way forward? Could save you considerable money in the long run, possibly!

GemBlueTopaz1984

UKBiker,

You need to look up the term deprivation of assets, if she needs to go into a care home then she will be required to pay for it as she has savings.

gem

chalkie99

GemBlueTopaz1984 is on the money with the reference to "Deprivation of Assets". You cannot get rid of your money by gifting it to avoid paying taxes or fees. However, if she is not currently likely to need care (nothing on the horizon) you might be OK. You should certainly research it a bit more.

If she did need care then most of her savings would be used to pay for it until she had only the qualifying amount left (think it is about £16,000 at the moment).

On the subject of leaving money on death, we have had two cases of elderly family recently who claimed that everything would go certain ways when they died but, in the event, neither had actually made wills. Never take for granted that a will has been made.

CH27

How quickly will the loan be paid back?

Depravation of Capital in a minefield so check everything very carefully.

UKBiker_2

I know . .Its a nightmare. She is 94 and in good health (For a 94 year old) ... Obviously the loan would help me out considerably. She does have a will and the money is earmarked for me. The biggest problem is getting a straight answer from anyone about what happens if she does go into care. It will take me about 5 years to repay the money under normal circumstances. The last thing I want is to loose the house if the government come knocking demanding the money back for her care.

CH27

UKBiker wrote: »

I know . .Its a nightmare. She is 94 and in good health (For a 94 year old) ... Obviously the loan would help me out considerably. She does have a will and the money is earmarked for me. The biggest problem is getting a straight answer from anyone about what happens if she does go into care. It will take me about 5 years to repay the money under normal circumstances. The last thing I want is to loose the house if the government come knocking demanding the money back for her care.

Google Care home - deprivation of assets.

CLAPTON

well, if she has 135k in the bank I can't see an issue with her giving you 20k as a loan or as a gift.
if she needs to go into a care hope she will be able to afford to pay her way for quite a time before the money runs out

UKBiker_2

CLAPTON wrote: »

well, if she has 135k in the bank I can't see an issue with her giving you 20k as a loan or as a gift.
if she needs to go into a care hope she will be able to afford to pay her way for quite a time before the money runs out

At £500 up to £1000 a week I doubt that !! :rotfl: