Gifting etc Clarification

I am not entirely clear about the interrelationship between planning for Inheritance Tax purposes, and trying to alleviate the 'going into care' black hole. I understand if I gift money to my children it will not count for IHT purposes if it is done more than seven years before I die; but does this count as 'wilfully depriving' oneself of assets for the Local Authority capital calculation?
If for example I were to sell my house tomorrow and gift the proceeds to my children, then in eight years time require residential nursing care, would the children still be on the hook?

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  • Mojisola
    Mojisola Posts: 35,545
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    If for example I were to sell my house tomorrow and gift the proceeds to my children, then in eight years time require residential nursing care, would the children still be on the hook?

    For deprivation of capital to be proved, the authorities are supposed to show intention to deprive yourself in order to claim means tested benefits.

    However, if you can't give a good reason why you would give away all your money, deliberate deprivation is often assumed.

    Would you really want to spend your last years in a home funded by the LA rather than one you chose?

    What would you live off in the mean time?
  • Spivved1987
    Spivved1987 Posts: 155
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    No, not really. It's more a case of seeing what trumps what in terms of IHT/Social Care. Can I do something which is perfectly reasonable under IHT rules only to see it quashed by the LA.
  • Mojisola
    Mojisola Posts: 35,545
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    No, not really. It's more a case of seeing what trumps what in terms of IHT/Social Care. Can I do something which is perfectly reasonable under IHT rules only to see it quashed by the LA.

    You can give money away to reduce your IHT liability and that would be a valid reason for arranging your affairs like that.

    As you would only need to reduce your estate to below the £325,000 threshold (up to double that if you can use a spouse's allowance), you would still have plenty left to pay for your own care so DOC wouldn't really be an issue.
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