Advice please on gifting money

donashford

My mum aged 75 has been ill recently, followed by my father who is 73. Mum has a small amount of savings, nothing much to speak of, however my dad has approx £35-38k in various ISAs and accounts.

The hospital social worker told me that I need to look at getting power of attorney now "just in case". My parents are fine with this.

She also spoke about my dad "gifting" some of his money to myself or my children so that he will not have to pay for ongoing care, her arguement was that £35-38k would not buy him much in care home terms (they live in a council property so have no equity in their home). Apparently he needs to have less than £24k to his name to be considered for free care.
I've been reading up on gifting and it seems that the limit is £3k per year, are there any other ways round this to get his lump sum down? I was thinking maybe he could give one of my children a lump when he turned 18 and the other a lump when she turned 21? I think this would be considered reasonable for a grandparent. My children would willingly just let the money sit in their accounts until my dad needed it. Any thoughts on this would be greatfully received.

thanks

Person_one

Google 'deprivation of assets'.

McKneff

Your hospital social worker is completely wrong and somebody needs to tell her. If she is giving this information out willy nilly, she needs some retraining.

angeltreats

McKneff wrote: »

Your hospital social worker is completely wrong and somebody needs to tell her. If she is giving this information out willy nilly, she needs some retraining.

Unfortunately this is correct - your social worker needs to stop giving people incorrect and potentially harmful information.

The £3,000 you refer to is the IHT annual gift exemption and as your parents have no IHT liability this is completely irrelevant.

As far as just giving away their money to avoid care home fees is concerned, whoever said to google "deprivation of assets" was right.

You really need to take advice from an IFA and a solicitor who specialise in long term care/POA issues.

74jax

I was in a very similar position, Dad and Mam gave myself and my brother POA and looked into gifting us money each year. As I'm getting married he was tld he could give some money toward that too (not sure if that is true) and he has always bought myself and my brother a car every 3 years, so was informed as we can prove this has always been the case it can continue without people thinking he was 'trying to get rid of money'.

We starting looking at care that they would recieve etc and found that if he contributed just a little (maybe around £200 a month) the standard of care was greatly improved.

They are still at home at the moment and if they had given my self and my brother 3k every year it would certainly have 'got rid' of some of the money (and we are nearly 7 years on now).

We decided against this as when we started looking at care, if they contributed around £200 a month the care seemed to increased to a much greater standard. It's horrid to consider parent's in a care home however the ones we looked at a few years ago convinced us we made the right decision in not taking any money.

Maybe you could look at care homes/packages near you and see if this is the case?

We have tried to convince they to spend the money on keeping them comfortable whilst still at home and it seems to be sinking in, they are early 80s and quite 'old school' in that people need an inheritence, it's taken some time to change their ways and spend it on making there last years more comfortable. Until you've looked at what their money can buy for them to have an easier life, I don't think it's quite the time to look at gifting.

mintymoneysaver

I do know that my grandma 'gave' us some money at the beginning of her Alzheimers, and when she died we just put it back with the rest of her money. Having said that she actually had very little. ( about 12k) I'm not really sure what happened about her care home fees, as it was a bout 15 years ago now.

ognum

My friends father used some of his assets to buy a funeral plan, it reduced his assets enough for him to receive financial help with care.

You do need to take care that his cash is used for him and not construed as deprivation of assets, is there something he would like to do, something he needs or upgrades to house that would make things more comfortable.

NAR

If he bought funeral plans for the two of them, which I don't think would be seen as DOA, that would take care of £6k to £7k. At least that would reduce the period of time of paying for care needed to reduce the savings to £24k.

daska

If there is a real prospect of either of your parents going into care in the near future then following the social worker's advice is potentially going to land them with an accusation of deprivation of assets.

The social worker is correct with regard to the PoA.

If they're likely to be in and out of hospital or perhaps suffering mobility problems but still competent then a basic PoA will be useful so you can ensure urgent matters are dealt with, visit the bank for them etc

Enduring PoAs have to be made while competent and only come into force when competency is lost. http://www.justice.gov.uk/about/opg

Mojisola

donashford wrote: »

My mum aged 75 has been ill recently, followed by my father who is 73. Mum has a small amount of savings, nothing much to speak of, however my dad has approx £35-38k in various ISAs and accounts.

It would be worth your father either transferring half of his savings into your mother's name or putting the bulk of the money in joint accounts.

If one of them needs to go into residential care, only the assets of the one going into care will be assessed. Any assets in joint accounts with be considered to be owned 50/50. As long as that person has under £23,250, they will be funded by the LA but only in homes that charge the LA rate. The homes in our area that charge this rate are not places I would like to spend my last years.

Worth reading -
https://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS10_Paying_for_permanent_residential_care_fcs.pdf?dtrk=true
If the person wants to go into a home that costs more, someone else has to pay a top-up fee.

Lunar_Eclipse

I am sorry to hear your mum/parents are unwell. I appreciate this is probably quite a distressing time for your family.

The £3k/year limit is not applicable since the inheritance tax threshold will not be exceeded in this situation, once your parents pass away.

However, I also disagree with the suggestion of gifting money to avoid paying for care. If someone is able to pay for something they need, I believe they should. I know not everyone will agree, but I can't help but wonder what will happen to the prices of care for the elderly when more people don't pay for it (ignoring the fact it's ridicously expensive and ideally the elderly should receive the care they need regardless of their financial circumstances.)