Financial gifts

Sallyfrana

My mother is about to go into care. She has her own flat and some savings (about £30,000), so she will have to pay for the care herself. This is until her assets drop to £23,000 or less.
She wants to gift £5000 to her family but we are not sure if this is allowed as it might be seen as asset stripping by the local authority. They might want to claim this amount back when local authority funding kicks in.

Can anyone advise about this? She doesn't meet the threshold for inheritance tax as her flat is worth only about £150,00.

Help please!

Lokolo

http://www.ageuk.org.uk/home-and-care/care-homes/deprivation-of-assets-in-the-means-test-for-care-home-provision/

It is called depreivation of assets, to give away money to avoid things like care home. There are rules on it, unfortunately I don't know the rules myself but I think it's a no-no.

However, have a read using the above link, should be more info there.

dunstonh

She wants to gift £5000 to her family but we are not sure if this is allowed as it might be seen as asset stripping by the local authority.

It would fall under deprivation of assets.

She doesn't meet the threshold for inheritance tax as her flat is worth only about £150,00.

Inheritance tax isnt the issue. Gifting rules only apply to IHT. Deprivation of assets in respect of a means tested benefit is different.

atush

She can still gift smaller sums for birthdays and xmas to individuals, but not larger lump sums like this that are intended to reduce what she pays for her care. She will most likely need to sell her flat as well.

She will be able to leave her left over savings once her other capital is depleted, and I would be happy she has some funds to pay for her care as she will be able to choose a nicer home.

Sallyfrana

Thankyou atush, dunstonh and lokolo.
I looked on the ageuk website and it was very helpful. However the advice is not clear and it seems that different local authorities have different interpretations of the rules of recovery.

Will pursue this though.
Many thanks

CKhalvashi

Sallyfrana wrote: »

Thankyou atush, dunstonh and lokolo.
I looked on the ageuk website and it was very helpful. However the advice is not clear and it seems that different local authorities have different interpretations of the rules of recovery.

Will pursue this though.
Many thanks

The rules are different by LA, however whilst we have a ringfenced budget for loans, to avoid the house being sold until after death, many now don't.

It will be up to your own County Council.

CK

saintalan

The thing I can never understand is at what age does the possibility of Deprivation of Assets occur.

Or is it just Intention that matters regardless of age/infirmity etc and how do you prove intent?

Cheers

Alan

Mojisola

Sallyfrana wrote: »

My mother is about to go into care. She has her own flat and some savings (about £30,000), so she will have to pay for the care herself. This is until her assets drop to £23,000 or less.

She wants to gift £5000 to her family but we are not sure if this is allowed as it might be seen as asset stripping by the local authority.

They might want to claim this amount back when local authority funding kicks in.

It would be looked on as DOC. If it's one £5k lump sum, I doubt the council would try to recover it. They would probably just do the sums as if she still had that money in her account and so wouldn't fund her care until her capital had reduced to £18k instead of £23k.

CKhalvashi

saintalan wrote: »

The thing I can never understand is at what age does the possibility of Deprivation of Assets occur.

Or is it just Intention that matters regardless of age/infirmity etc and how do you prove intent?

Cheers

Alan

It will be deemed intent.

If you wish to fight it, then the court system will be the most viable option, and I don't feel that it's particularly viable.

I'm 30 at the moment, so any gifts that are given probably wouldn't be taken into account. If I was retired, however, then to a reasonable person it could be easily construed as deprivation.

CK

dunstonh

The thing I can never understand is at what age does the possibility of Deprivation of Assets occur.

From the day you are an adult as it applies to all means tested benefits and any action taken with the explicit purpose of depriving assets for means test purposes has no timescale.

However, a happy coincidence, such as the use of an investment bond for investments for tax efficiency is perfectly fine as the justification was tax efficiency.

Realistically, the further back you go, the less likely something would be identified as deprivation of assets.

saintalan

Not my situation - but say at 40 you had a child and saved for them in your own name and at age 60 when it matured you might need to go in to care.

The intent would not have been to deprive. Is that right?

Thanks
Alan