Inheritance help

Goodie100

Hi everyone

I wonder If you can help. My dad was left a house in a will he has now sold it and will come away with £100000.
He wants to put the money into my bank account and then for me to give out £50000 to siblings etc. then he wants to leave the rest in my account for me to give to him when needed.
He is worried as he's 71 now about loosin his money to a care home or carer fees. and loosing his pension.
I would like to know if this is legal? Plus as I'm a self employed builder would this course tax problems for me?

I'm new to this so any advice/help would be welcome
Thanks.

cte1111

If your Dad is giving his money away specifically to avoid paying for care home fees, then he will be treated as if he still had the money. It it was OK to do this, then everyone would do so.

It is called 'deprivation of capital'.

le_loup

Legal! What do you think?
Get the cheating buggre to look up "deprivation of assets".
Get him too look round council funded care homes and self funded ones.
This board is here to help people make the best of their money, not a crooks charter!

Goodie100

I think that last post was a bit harsh! My dad has worked hard all his life and still at 71 does a day a wk gardening. He has paid all his taxes and has never claimed anything.he not use to having this money and it's confusing him. He's not trying to cheat anyone he just wants the best for his children. If you ask me I think he's to generous by giving £50000 of his money away I'd rather he kepted the lot and enjoy the rest of his life like he deserves but my brothers want their inheritance. It's a tricky situation and I would like so advice not a character assinination of my father thanks.

McKneff

He won't lose his pension, its as simple as that, thats what he gets for all the work he has done over the years.

He cannot just give money away.

If he ever has to go into care and has spent all his half of this money, he will be assessed as if he has the whole
£100K and be treated accordingly, then the family will have to fund his care.

Google deprivation of assets.

So he would rather give his money away and then live in a poverty stricken council care home than have a lovely life in a top notch care home. Using his own money and enjoying what's left of his life.

littlemissbossy

My mother in law lives in a care home (father in law also until he died earlier this year). I can tell you nursing homes EAT money like there's no tomorrow. They sold their house when they moved into the home, all that money has been spent and also most of their savings.

At first me and hubby were shocked at the costs involved but do you know what you can't put a price on safety and comfort.

When they lived in their own home I was always worrying who was knocking at their door trying to sell them a new roof, or asking them to watch the taps whilst their home was ransacked.

They worked hard all their lives so they could spend their later years in peace and comfort, you hear some shocking stories about homes so if their savings got them a nice, safe place, then its worth it.

It is a difficult situation, I speak from personal experience and do sympathise.

Just to add, when my inlaws got to the savings level where the council contribute, I had to attend a meeting, produce bank statements, DWP paperwork, they are looking for deprevation of assets (as others have mentioned), if they think this has happened your father will be assessed as if still having the money and therefore getting no help. I believe different councils have different rules for how far they look back - so not black and white!

Linton

It seems unclear whether he considers the money he gives you his or yours. For example should you die, become bankrupt, or possibly divorce the money would be seen as yours - he would lose any access to it.

So I believe giving money to someone on the understanding that they will give it back is dangerous and it's ineffective for tax purposes. Google "gift with reservations".

In my opinion the best thing he can do for you is for him to keep the money in as high an interest account as possible and let you inherit on his death. You will then not have to worry about the possibility of your father having to live his final years in a cheap council care home.

If he wants to give you something now, persuade him to make it a few K leaving the bulk with himself.

ed123_2

"but my brothers want their inheritance" err.... one normally only receives ones inheritance after someone has died. The maximum you can give away each year is £3000pa for seven years before death. Higher amounts /death before seven years would attract inheritance tax. If he is receiving pension tax credit then by giving this money away would be classed as deprivation of capital and he could be done for fraud by the DWP.(similarly re care home costs). At 71 it can't be that "confusing" for him to place the money in a couple of savings accounts in his own name and declare the amount to DWP and HMRC(re saving interest he may even be due some tax back from HMRC)......ed

Biggles

Goodie100 wrote: »

I'd rather he kepted the lot and enjoy the rest of his life like he deserves but my brothers want their inheritance.

It isn't their inheritance (or yours, for that matter), it's his money.

If he needs to go into a care home at some time in the future, he might well want to be able to choose a good one. My children understand this, and so should his.

There is the possibility, as pointed out, that he might well be assessed as still having that money and be required to pay full whack for living in a council home, which would surely be the worst scenario.

Yorkie1

1. As others have said, if he currently receives any means-tested benefits then he will have to declare the £100K, irrespective of what he subsequently chooses to do with it.

2. As others have said, if he needs either means-tested benefits or residential care in the future, and has given away some or all of the money, then the 'deprivation of assets' rules mean that he would be deemed to still have that money and therefore that he can afford to fund his own care.

If you and your brothers have spent the money by then, it would a fine mess with significant impact on your father.

3. As previously stated, there is a risk to your father in giving away the money / putting it in accounts not in his own name, even if it's just for 'safekeeping'. This is because he no longer has legal title to the money. If you went bankrupt, or divorced, or died, then the money would be at risk of being claimed by others - and would be completely lost to him.

Frankly, this is a major issue and he should obtain independent legal advice on this point alone because I'm sure he will otherwise just dismiss the concerns as "it won't happen", or "they'll see me right" when this prediction may well be far from the truth - for whatever reason - if the situation arises.

4. Impact on you. If you suddenly had £100K sitting in a bank account in your name then you will be getting the interest and you will have to pay interest on it. The income may well push you into a higher tax bracket, depending on your current declared income position.

NB. Even if you pass the interest on to your father, it may well be less than if the accounts were non-interest bearing in his own name.

5. Your accountant will possibly want to know about the source of the funds in order to complete your accounts if the bank accounts are connected. I don't know enough about tax to answer whether a sudden appearance of £100K could trigger an investigation, for example. Ask on the tax board or your accountant if you really do plan to go ahead with this ill-advised scheme.

6. Finally, I agree with all the other posters who have said that until your father has died, it is premature for anyone to say that they want their inheritance now.

They are not entitled to anything until he dies - and if they're that desperate for the money now, they may well be likely to spend it and so not be able to pay for your father's care fees if / when he needs money in later life because he's already deprived himself intentionally of it. It's really quite selfish of them once the law is explained.

6022tivo

He did not earn the £100000, give it to charity.