Care Home and Savings

danjones

Hello,

Can anyone be a bit more clued up on this give me some guidance.

My aunt is currently self funding in a care home, she has sold her property and now has considerable savings in excess of £150k.

Now she wants to give some to the nieces and nephews, not sure of the amounts but around £2k each as gifts. We've told her to hang fire as we don't want this to be seen as deprivation of assets and us having to cough up in the future. She would still be left with around 130k after the gifts.

We've worked it out as her having around 9/10 years worth of self funding left after she's gives the funds away before the state would have to start to contribute. She has a pension which covers most of the amount of the fee.

Guidance, information and any experiences would be appreciated!

pollypenny

I think AgeUK would be the best place for you to find out.

My understanding is that if gifts were previously given, they are deemed usual and will not count as deprivation of assests.

scotsbob

Someone could easily "lose" £20,000 if they became addicted to gambling, as can so easily happen with online poker etc.

Pollycat

Hi Dan
Deprivation of Capital rules seem to be very fuzzy.

All the Counsel & Care guides seem to relate to disposing of capital before going into a care home or before the financial assessment, not after.

How old is your Aunt?
My own view is that if your Aunt has sufficient funds to pay for care home fees for almost 10 years, giving away £20K now may not be viewed badly.

What about the implication of Inheritance Tax on gifts?

This may help:
http://www.hmrc.gov.uk/inheritancetax/intro/basics.htm

monkeyspanner

Councils are having difficulties funding care so I think it is likely that they would consider gifts of large lumps of capital as a deliberate deprivation of assets. However, there is no need to declare these gifts and it will only become an issue when the savings reach the lower savings limit of around £23500. and the council have to assist with funding. At that time the council can go back as far as they like to look for capital distributions. If they then consider it a deliberate deprivation they will probably assess as if the savings were still there. So as long as the gifts don't exceed the lower savings limit there should still be enough to pay for care until the council will assist. The council can recover funds from the recipient I think for up to 6 months but if your relative will be self-funding for years this is unlikely to happen. In any event no relative can be forced to pay for a relatives care. It could also be argued that with no reasonable prospect of the council having to assist there was no intention to avoid paying fees.

JuneBow

The deprivation of assets rules are designed not to be too specific or else it would be possible to find loopholes.
So in order to prove deprivation of assets, the council would have to prove intention to deprive yourself of assets in order to make a claim to means tested benefits. In this case home fees.
The council can go back indefinitely. However, in practice they generally only go back six months if it cannot be envisaged that care will be required. Often when people go to see a solicitor to do this, the solicitor will advise that if the reason that the gift was to claim benefits the gift will fail. If that reason is on the notes of the solicitor, then the gift will fail.
The LA will look into all of the circumstances of the gift.
In this case the person was already in accommodation and has sufficient funds for 10 years.
They will ask (amongst others,) the questions
1. Woud the individual expect to live another 10 years
2. Is there a history for making gifts of this nature
They will also look at the size of the gifts in relation to the person's estate.
They will want to know why the gift was made now. Perhaps the recipient has immediate need for funds now.
In short, the LA will look into all of the circumstances of the gift, and if the gift was primarily to avoid means testing, the gift will be ignored.
They would continue to invoice the individual regardless of their capital level. Having said that, because they would not be able to get the money back from the relatives. which LA wants to take an 80 odd year old woman to court to get the fees?