Care Home Costs - Gifting some savings away?

Simon555_2

My Step-Mother has a trial period at a Care Home, starting today, it will probably lead to permanent care.

With her declining health (Altzheimers) the emotions were too raw to help her do anything 'efficient' with her savings, and she will be in the trap of having to pay full costs until her savings drop below a certain figure.

A simple question:-

Is she within her rights to 'gift' (is the figure £3,000?) to each of her offspring before the benefits people start making their calculations?

None of us four offspring are desperate for money, and would earmark 4 x £3,000 for her future needs.

del76

I would imagine it came under depravation of capital, with intent to defraud the taxpayer?

Simon555_2

If it's not allowed, then it won't be done!

But according to Inheritance Tax rules :-

Annual exemption

You can give away gifts worth up to £3,000 in total in each tax year and these gifts will be exempt from Inheritance Tax when you die. You can carry forward any unused part of the £3,000 exemption to the following year, but if you don't use it in that year, the carried-over exemption expires.
In addition to the annual exemption there are other exemptions for certain types of gifts. These are explained below. Exemptions cannot be combined to increase the amounts given away to the same person.


Does this same allowance apply to her situation?

[Deleted User]

Simon555 wrote: »

If it's not allowed, then it won't be done!

But according to Inheritance Tax rules :-

Annual exemption

You can give away gifts worth up to £3,000 in total in each tax year and these gifts will be exempt from Inheritance Tax when you die. You can carry forward any unused part of the £3,000 exemption to the following year, but if you don't use it in that year, the carried-over exemption expires.
In addition to the annual exemption there are other exemptions for certain types of gifts. These are explained below. Exemptions cannot be combined to increase the amounts given away to the same person.


Does this same allowance apply to her situation?

no because she would be giving away the money in order to gain a benefit,as above this is deprevation of capital,and if you go down that path it could be fraud

del76

Nope :- I can't see that it does. She could gift you and your siblings the money, The county council via the benefits office will see this in her financial dealings and if it miraculously took her under the benfits amount for care, would see it as deprevation of capital. They could then insist she pays out of her surviving savings already below the threshold. Or refuse her funding for care, and leave it up to you to pay.
If 12,000 will take her under the threshold then it won't be long until that is spent on care, 4-6 months.

Simon555_2

Thankyou so far, Googling the phrase 'Depravation of Capital' has led me to some evening reading.

del76

Simon555 wrote: »

Thankyou so far, Googling the phrase 'Depravation of Capital' has led me to some evening reading.

Deprivation of capital: what can I spend before moving into a care home?
Deprivation of capital
[FONT=StoneSans,Stone Sans][FONT=StoneSans,Stone Sans]The guidance around ‘deprivation of capital’ states that ‘intention’ is a key factor in the transfer of property or capital. Where a local council Social Services believes that capital or ownership of a property was transferred with the intention of avoiding paying care home fees, the local council Social Services may decide that this amounts to ‘deprivation of capital’. If the local council Social Services makes this decision, it sees you as still having that capital or property and will include the full value in your financial assessment. If the value is over £23,250 (England), £22,750 [/FONT][/FONT][FONT=StoneSans,Stone Sans][FONT=StoneSans,Stone Sans]Factsheet 1: deprivation of capital – what can I spend before moving into a care home? 2010-11:1 [/FONT][/FONT][FONT=StoneSans,Stone Sans][FONT=StoneSans,Stone Sans]2
[/FONT][/FONT][FONT=StoneSans,Stone Sans][FONT=StoneSans,Stone Sans](Scotland) and £22,000 (Wales) you would be expected to fund your own care until your capital drops to that level. There is no time limit on the transfer of assets. However, the local council Social Services would need to look at different factors including the reasons for transfer and whether or not it could be foreseen, at the time of the transfer, that it was likely that you would need care.


Just a quick google myself, seems that as you now expect her to go into care, the very fact she is having a trial then any large expediture now can be seen as deprevation of capital.

Del
[/FONT][/FONT]

Simon555_2

There we go, thanks for your help everybody. Thank God I found out it was a non-starter before broaching the subject with my Sister at this difficult time.

Inheritance tax allowance
[FONT=StoneSans,Stone Sans][FONT=StoneSans,Stone Sans]There is not a direct link between the two. As far as we understand it, if you use the inheritance tax exemption allowance of £3000 per year to gift to family or friends when you are above the upper capital limit, the council may view this as deprivation of capital when assessing care home fee charges. [/FONT]
[/FONT]

clemmatis

There's another issue, Simon, that I faced when my mother fell ill and could no longer, realistically, handle her finances: power of attorney.

(that doesn't affect deprivation of capital rules, obviously. My mother had to pay care home fees, still. But it made life a lot easier for her, anyway)

You could also talk to Age UK about help for the fees, about NHS Continuing Care

http://www.nhs.uk/CarersDirect/guide/practicalsupport/Pages/NHSContinuingCare.aspx



the over-50s sub-forum here has threads on this

del76

You're welcome, had she been giving a gift of 3k per year for the last 10 years then it wouldn't be seen as such as there was no immediate expectation of her going into care.


Del

Simon555_2

Thanks Clematis. My Sister has Power of Attorney, and has been arranging care visits for six months now, so she's all over this.

del76 - Rub it in, why dont ya !

Looks like she might be able to gift my Sister a few thousand for her wedding next year, without breaking any rules, as it's a one-off...well second marriage actually.