Does this seem all right?

itsanne

My brother and I have LPoA for my mother (mid 80s) who is still very competent both mentally and physically. She actually makes all financial decisions herself, although she runs them past me after removing money from an ISA to put it in another one a couple of years ago. I use the LPoA for sorting most things like house insurance, internet etc and giving cheques/cash as she asks as well as the one thing which makes me need a stiff drink – HMRC (despite all her affairs being very straightforward)!

When my father died my siblings and I received a lump sum following a deed of variation. My mother also gave us all a lump sum when she down-sized. There would still have been no inheritance tax had she not done so. Although she is happy to spend on anything she wants, her pension (£2000/month) comes to more than she spends, so the money in her current account grows until she periodically wants to give it to us or her numerous grandchildren – she already has savings in a cash ISA and does not want to save further “at her age”. She is scrupulously fair in ensuring that each of her children receives the same, and her grandchildren are all treated equally. (I’ve included that last sentence because I know I should not benefit as a result of LPoA – I don’t.)

She had given out the money after down-sizing before either she or I had come across the concept of deprivation of assets, so certainly had no intention of deliberately avoiding funding care should she need it. Having raised this issue when I discovered it, her view is that her house worth £150,000ish and pension should be sufficient to pay for any care she might need. That seems reasonable to me.

Is there any problem with things as I have described them?

Mojisola

itsanne wrote: »

She had given out the money after down-sizing before either she or I had come across the concept of deprivation of assets, so certainly had no intention of deliberately avoiding funding care should she need it. Having raised this issue when I discovered it, her view is that her house worth £150,000ish and pension should be sufficient to pay for any care she might need. That seems reasonable to me.

Why not visit a few residential homes in her area and see how much the homes she likes cost?

You can then work out how long her capital would last.

She would have her pensions and, presumably if she needs care, Attendance Allowance, so her capital would only have to make up the difference.

If the places she would like to stay in are £1000 a week, she may decide to hang on to her money to spend on her own future.

itsanne

Mojisola wrote: »

Why not visit a few residential homes in her area and see how much the homes she likes cost?

You can then work out how long her capital would last.

She would have her pensions and, presumably if she needs care, Attendance Allowance, so her capital would only have to make up the difference.

If the places she would like to stay in are £1000 a week, she may decide to hang on to her money to spend on her own future.

I do intend to check out prices but I had not considered Attendance Allowance - thanks for that. If the need arose the family would all be willing to contribute too.

All the impetus for giving money to the rest of the family comes from her- we'd be very happy to see her hanging on to it for the future!

I don't really like thinking about all this!

Mojisola

itsanne wrote: »

I don't really like thinking about all this!

It isn't pleasant. I'm in the process of selling Dad's house because he's had to go into care (and is much happier there than he was at home, thank goodness!) and doing the sums can feel very mercenary.

Keep optimistic because not all older people need residential care and many are able to manage with help at home.

If you are doing things like making phone calls for your mother, it might be worth looking at the lower level of AA now. If she doesn't need the money weekly, would she put it in a savings account?

I have found it much easier sorting Dad's finances out because he had some money available to pay for the care home (first month in advance), some things that needed to be dealt in the house before it went on the market and a couple of legal things.

If residential care is needed and the sums add up, her home could be rented out rather than sold. Would she be willing to spend money on the house so that it would be in a rentable state if that was needed? Keeping it updated would also make it easier to sell.

Biggles

You will be able to buy an Immediate Care Needs Annuity for less than the value of her house, and this will pay for her residential care needs indefinitely.

itsanne

I knew this was the place to ask - two posters already, both with things I hadn't thought of! Thanks both of you.

My main concern has been to ensure that the way Mum handles her money doesn't cause any problems in the future.

Mojisola, Mum's house is in excellent condition. She had it completely gutted when she bought it three years ago. She is willing to spend as needed, and to do things she wants like going on holidays. There is also money in an instant access ISA for any upfront costs needed

Mojisola

itsanne wrote: »

Mojisola, Mum's house is in excellent condition. She had it completely gutted when she bought it three years ago. She is willing to spend as needed, and to do things she wants like going on holidays. There is also money in an instant access ISA for any upfront costs needed

Looking good, then!

I can't see any reason for her not to continue giving money away as she has been doing. Her future sounds well catered for.

Gers

The HMRC have an exemption called 'gifting out of income' which you could usefully look up.

The easy stuff:- if your mother has a surplus of income over usual expenditure then she can gift any amount away to anyone, as long as she is able to maintain her usual standard of living. Can't be done from capital. There has to be a regular pattern of gifting which demonstrates this intention, however even if only one gift is made before she dies the amount is still exempt if some evidence can be found which shows intent to make the gifts regular.

There will be legal stuff about this too, however this is the gist of it. I'm the recipient of such gifts and both my mother and I document the monies (initially via discussing it with her financial adviser and then in an email to both him and I) and by the monies being transferred from her bank direct to mine - so no paper money changing hands.

Even HMRC acknowledge the usefulness of this 'gifting' as it's tax free for both the donor and recipient.

I'm sure that others will be more able to explain things, however it's something which your mother and family could consider doing with her surplus income. She could gift the monies in a rota to each of her children/grandchildren/anyone else.

itsanne

Thanks Gers, but I don't think it applies as she's below the threshhold for inheritance tax.

Please someone correct me if I'm wrong.

Mojisola

itsanne wrote: »

Thanks Gers, but I don't think it applies as she's below the threshhold for inheritance tax.

Please someone correct me if I'm wrong.

You don't need to worry about it if she won't be paying IHT but it would be worth documenting gifts from the DOC aspect, especially as you have POA. Think of it as protecting yourself and your brother from any complaints in the future.

itsanne

Mojisola wrote: »

. . .worth documenting gifts from the DOC aspect, especially as you have POA. Think of it as protecting yourself and your brother from any complaints in the future.

Would money gifted have to be every month to prevent her current account building up or could she wait until it reaches a set amount and then give it out as she currently does?

Even though it's what she ends up doing anyway, I don't really like the idea of suggesting she should be giving the money away, especially as it looks as if deprivation of assets wouldn't be a problem. Although I have LPoA, I normally only use it for her convenience, and the only suggestions I make are to save her money or persuade her to spend it on herself. However, I will discuss this with her as she wants to talk to me about the money building in her account again. She certainly would not want my brother or me to have problems in the future.