Passing money on to the children

2

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  • If mum has to go into care, what's to stop her renting her property out and using that income to pay for care, topped up if necessary from savings, pension, family etc.? Alternatively, give to family now, survive 7 years, and family pay care home bill in due course.

    Anything illegal,unethical,improper about that?

    Taking Option 2 where does she live for the 7 years? It doesn't work if she lives in her own house(the one she gave away) unless she pays them a market rent - on which they will pay income tax.

    When she dies they will be stung for Capital Gains Tax.
    Robert
  • oxteroxter Forumite
    173 Posts

    Taking Option 2 where does she live for the 7 years? It doesn't work if she lives in her own house(the one she gave away) unless she pays them a market rent - on which they will pay income tax.

    When she dies they will be stung for Capital Gains Tax.

    OK I didn't claim to be an expert. But what about option 1 - surely that's ok and saves the old lady selling her home and using up the capital?? Looks like you can't avoid inheritance tax at the end of the day if it brings the estate over the threshold.
  • lisyloolisyloo Forumite
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    But what about option 1 - surely that's ok and saves the old lady selling her home and using up the capital??

    It entirely possible but I would poitnout 2 things.

    1) She will have to pay income tax on any profit she makes.
    Usually people reduce this by having a mortgage (as you can offset interest payments), so she'll have to pay about 22% of it in tax.

    2) Being a landlord is not like putting money in the bank.
    It involves work.
    If she is in a home then she is probably not capable of doing the work involved.
    Someone needs to:-

    Sort out any problems that tenants have e.g. plumbing, broken washing machine.
    Periodically repair, redecorate and replace.
    Interviww tennats, check references.

    Some of this can be done by professionals but obviously that reduces profit.

    Also bear in mind that this involves risk. At the lower end of the scale there are voids (empty period) and the other end of scale, there's the tenants from hell who disspear without paying.

    This doesn't sound to me like a job for someone in residential care, so it would have to be managed by a family member.
    If there is a willing volunteer who can manage it and has the time then all well and good, but remeber to reduce the income by tax and any agents fees and include a decent reserve for repairs etc.

    I don't think it's quite as easy as it first appears, but essentially yes, it can be done.

    The lcoal authority won't care how the charges are paid as long as they are paid.
  • oxteroxter Forumite
    173 Posts



    This doesn't sound to me like a job for someone in residential care, so it would have to be managed by a family member.
    If there is a willing volunteer who can manage it and has the time then all well and good, but remeber to reduce the income by tax and any agents fees and include a decent reserve for repairs etc.

    .

    Agreed. Good points. But at least it's an option, and if the family benefit in the long run, should be worth considering
  • Agreed.  Good points.   But at least it's an option, and if the family benefit in the long run, should be worth considering

    It would be nice if the lady herself could have some input here. 'The family benefit in the long run'...but who's giving any thought to her own wishes/needs/plans/ideas?

    I'm glad none of my relatives came along to me with these kind of ideas when I was 62, same age as this lady. I was widowed when I was 57 and had struggled hard to keep the roof above my head, doing a number of menial jobs in the 5 years up to 1997, when I met my (now) second husband. I had no idea at all that life would change so radically for me - but it did, and it just shows that you don't know what's around the corner and how your future options and prospects can change so quickly.

    Incidentally, I considered entering a convent after widowhood. I was told not to sell my house, I might not carry on in the convent (in fact, I survived just 2 weeks of the 3-month pre-novitiate). Part of the problem was that I just could not walk away and leave everything behind - the building society would have had to be informed that I was letting the place, then there was all the maintenance, repairs, correspondence etc to deal with. Impossible to do at a distance, as indicated in the posts above.

    My husband says he could never have imagined me as a nun! But it just shows, when you're bereaved you sometimes do get crazy ideas. I'd counsel this lady to let things settle down, then do whatever she feels like doing. She may want to sell up and use the money to go round the world - who knows?

    Margaret
    [FONT=Times New Roman, serif]Æ[/FONT]r ic wisdom funde, [FONT=Times New Roman, serif]æ[/FONT]r wear[FONT=Times New Roman, serif]ð[/FONT] ic eald.
    Before I found wisdom, I became old.
  • Firstly I would agree with Margaretclare that 62 is far too young to consider financial planning to avoid nursing home costs.

    Sheltered accommodation is an alternative when household chores get a bit much. However surely the best financial option, if avoiding nursing home costs are the major consideration, is for her children to look after her in the latter stages of her life; at their house or hers. There is plenty of help available for this – either provided by the State or paid for privately.

    It is too easy for a thread like this to widen. I would simply say that I would hope that factors, other than finance, will determine how my final days are spent.
    Robert
  • It is too easy for a thread like this to widen. I would simply say that I would hope that factors, other than finance, will determine how my final days are spent.

    Yes, I agree, Robert. I've nothing more to say on the topic except....I mentioned above that you cannot, 62 or not, see what's round the corner. Life has a habit of springing surprises, some nice, some not so nice.

    Thinking of the original post, about passing on money to the children, at the end of November 2002 my younger daughter came here. We walked down the garden together and I said 'This will be yours one day'. She squeezed my arm and said 'I hope not for a very long time'.

    One month later she was dead. She died very suddenly and unexpectedly. So you see, although you think you'll outlive your mother, the possibility is there that she may outlive you. Then what?

    Whatever I and my husband have between us is primarily for our use, comfort and enjoyment, and it mainly consists of the equity. Anything left over is to be split between 5 grandkids, 3 of mine and 2 of his. But this is after our needs and wishes are taken care of.

    Margaret
    [FONT=Times New Roman, serif]Æ[/FONT]r ic wisdom funde, [FONT=Times New Roman, serif]æ[/FONT]r wear[FONT=Times New Roman, serif]ð[/FONT] ic eald.
    Before I found wisdom, I became old.
  • lisyloolisyloo Forumite
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    However surely the best financial option, if avoiding nursing home costs are the major consideration, is for her children to look after her in the latter stages of her life; at their house or hers.

    Hi Robert - this is a nice ideal, but I know in my family that all adults are working and have financial responsibilities of their own (and some childcare responsibilities as well).
    I don't know many people who could take on full time care (if that's what you meant).
    Also many people in nursing homes requires nursing cares (drugs) or lifting which cannot always be done by family members.
    A lot of people in homes do have conditions that require specialist care e.g. alzheimers.
    Also I think often elderly people can benefit from a range of activities and company on offer in a good home which would not be on offer at home.
    There is plenty of help available for this – either provided by the State or paid for privately.

    Can you expand on this as I'm genuinely interested.
    I am not aware of any state help available for people who have their own assets.
    I am interested in this subject as I have in-laws who are 76 in sheltered accomodation.
    We are in the situation described above where all the children have financial or child care responsibilities.
    i.e. would loose their own home if they gave up work.

    p.s. no particular objection to using their own assets to pay for care.
  • Lisyloo,

    Perhaps my fault, but we could be going off at a tangent. The original question posed was how someone could give a house to their children to avoid the property being used to fund nursing home charges. i.e. get rid of their assets.

    On your first point:
    Obviously there will be situations where is just not possible for children to look after their parents for a variety of reasons. However I did qualify my statement by saying:
    However surely the best financial option, if avoiding nursing home costs are the major consideration.
    If finance is the driver then there will have to be compromises by those who stand to gain most.

    On your second point:

    My statement simply said:
    There is plenty of help available for this – either provided by the State or paid for privately.

    I have not indicated or implied that you can get State help if you have assets? If the subject lady has got rid of her assets State help is available; if not she pays!

    That said, although I have not looked at the problem personally , I believe that there is some financial help available, regardless of assets, in the shape of tax allowances and carers grants/allowances if children look after parents who would otherwise need residential care.

    Robert
    Robert
  • lisyloolisyloo Forumite
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    Hi Robert - thanks for clarifying.
    I wasn't criticising anything you said :)

    Personally I think it's a little premature at 62.
    Although any financial planning is good.
    Most of the relatives I know who've go into care have been at least 80 so there's quite a while to go.

    One of the big problems that many pensioners have is trying to balance spending their money i.e. enjoying it, but still having enough left to live on.

    This will be extremely difficult at 62.

    My parents in law are 76 but it is very difficult.
    They have some savings and we would like them to spend some and enjoy themselves on holidays whilst they still can (another few years and they may be unable to go due to health problems).
    However paying the bills and levaing enough left to live on is a major concern when they don't know how long they've got to budget for.

    We try and help where we can (like paying for a holiday when we can afford it) but we can't always afford to step in all the time.

    I think it's quite a difficult and common problem.

    Personally I am not trying to get my hands on any of our parents money, however I would like them to get the most out of it whilst they still can.
    It is however difficult when they are stressed about living expenses for the future.
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