Named bequest sold before death?

securityguy

vigman wrote: »

So, if Rose Cottage was now sold, and for example, 200K was held for care home fees and 133K given to each of the 3 grandchildren now

Given it appears that the estate will be liable for substantial amounts of IHT, the recipients of the gift would have a tapering potential liability unless he lives for seven years. And the attorney would make this transaction at their own risk, because it's quite clearly not in the interests of the donor, but rather in the interests of the grandchildren; if he did, in fact, live for seven years than he might have been rather glad of the money that was given away on his behalf.

troubleinparadise

Whatever Mr Smith's intentions may have been when he wrote his Will, a bequest such as a property can only be fulfilled if it still exists in his ownership at the date of death. Should it have been disposed of beforehand, then the bequest cannot be met.

Mr Smith's assets should be used to fund his care, not provide inheritances for his relatives, however generous his intentions may have been prior to becoming unwell.

Any attorney should only be acting in the best interests of Mr Smith, not potential heirs.

Conflict over the assets of Mr Smith seem rather selfish given that Mr Smith needs his assets to provide for his own needs. Whatever may be left after Mr Smith's passing should be seen as a pleasant bonus to his potential heirs, in my view.

In the interim, an alternative scenario to paying care home fees is that the family provides all the care he needs, thus saving the need to liquidate his assets - perhaps the potential heirs will step forward to provide that care?

dzug1

Well the other possibility is the Attorney resigns and hands running Mr Smith's affairs over to the Public Guardian.

I'm not sure that I would recommend that. It wil be expensive and won't solve much. And the delay in setting things up might result in Mr Smith being kicked out of his current nursing home.

vigman

troubleinparadise wrote: »

In the interim, an alternative scenario to paying care home fees is that the family provides all the care he needs, thus saving the need to liquidate his assets - perhaps the potential heirs will step forward to provide that care?

Readers here are not to know this, but one of the heirs in particular has given the last ten years caring for both "Mr and Mrs Smith". Mrs Smith was nursed at home until her death, and Mr Smith has also had total family and external care for many years but is now too ill to be cared for at home as recommended by experts after his last hospital visit due to physical and mental problems. The heir concerned, [my wife in the real case], has put this off for years and despite a terrible toll on her own health.

There are actually more heirs than described in the example, and as in so many cases, others even living closely nearby, have taken no part in the care of both or either parent.

Vigman

jackyann

Have you approached the Office of the Public Guardian for advice? I do think that seems a sensible place to begin.

vigman

securityguy wrote: »

Given it appears that the estate will be liable for substantial amounts of IHT, the recipients of the gift would have a tapering potential liability unless he lives for seven years. And the attorney would make this transaction at their own risk, because it's quite clearly not in the interests of the donor, but rather in the interests of the grandchildren; if he did, in fact, live for seven years than he might have been rather glad of the money that was given away on his behalf.

Firstly, would there only be any tax liability after the 7 years? (In this sort of gift situation, do recipients hold 40% of any lifetime gifts in 'tax accounts' in case it becomes due?)

Secondly, unfortunately, there seems little possibility of Mr Smith living for more than a few years at most as this is at the end of a 10 year care at home program as you will see from another response of mine.

*If* this happened, however, another asset would then be sold, and another heir or heirs would have to bear the cost of his continuing care.

However, the idea of the home holding a charge on a property seems well worth investigating.

Thanks

Vigman

vigman

jackyann wrote: »

Have you approached the Office of the Public Guardian for advice? I do think that seems a sensible place to begin.

Yes, I wrote to them and phoned them today! Until now, I did not know they existed!

It is essential to find out exactly what Power of Attorney daughter Sandra Smith has and when this was dated.

FYI when you fill in a OPG 100 request form on their site (to find out what POA exists) the "Email the Form Now" button does not work!

I rang them and you have to save the form and then attach it in an email to them.

Vigman

getmore4less

I don't think Sandra can start giving the money away.

Can't see how this would be Mr Smiths best interest.

If she can give the money away then gifts use up the nill rate band first so the rest of the estate ends up paying more tax not the gifts.

If Mrs smith estate did not use her nill rate band then Mr smith has up to £650k which any gifts would use up first

Errata

1) I would expect that the Attorney will have power over Mr Smith's financial affairs whether it was the old one, or the new one.
2) It is not in Mr Smith's interests that the Attorney gives away his money to others. His best interests are that his money is used to fund the best care possible; there are many Homes that charge far more than the one he is currently in, which enables them to provide a very superior care service.
3) Who in the family was informed of the application for POA? That has to be done to enable any objections to be lodged. They will know which Power was granted, and when.
4) Care Homes do not put a charge on a property; this is something that Local Authorities do to claw back the fees they have paid. Any Care Home that would be tempted to do so would expect to charge a very large amount of interest.
5) Did Mr Smith have the capacity to make a new will at some point during the ten years he was being cared for at home? If he did, then it must be assumed he chose not to because either the difficulty the family now finds itself in was not discussed with him, or it was and he chose to ignore the implications of his bequests.
6) I suggest you seek legal advice.

securityguy

vigman wrote: »

Firstly, would there only be any tax liability after the 7 years? (In this sort of gift situation, do recipients hold 40% of any lifetime gifts in 'tax accounts' in case it becomes due?)

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm#4