Father in Care

Notfarfromtheborder

Hi all

Following some advice gained re myself on pension forum, can anyone help with this

As title, Father in care with Dementia, unfortunately he isn't coming out. Got POA on his affairs.

I don't want to spend a massive amount of time actively managing matters.

Currently has an investment portfolio with Brewin Dolphin as an advisory client in a balanced portfolio circa £250K, producing about 4%.

House sale competed, £150K going to BD to invest this week.
Due an inheritance from Great Aunt shortly of £100K.

If I got 4% from all £500K invested, add state pension and small private pension his net loss from portfolio will be circa £5K after care costs pa.

Questions:-

Is 4% reasonable?

Would you suggest BD invest in stocks considering current position of equities or should they be looking to hold off investing in stocks and look for other options?

Any other bright idea's?

Thought of applying for 'Dead of Variation' through COP on his inheritance of £100K to avoid potential CGT of £40K as IHT planning, as it will be a long time before his cash runs out so no deprivation of assets issues. Got 18 months to decide on this as there is a 2 year time limit following my Great Aunt's passing.

Appreciate this may be frowned on by some, however, when he had capacity he always used IHT free allowances to gift cash. I don't need the cash, but my sister could do with it, we are both joint beneficiaries when he passes. (openly shared this with me when he had capacity)

Thanks

kidmugsy

Consider an Immediate Needs Annuity. If paid direct to the care suppliers the income is tax-free, and the beauty of an annuity is that it doesn't run out.


No expert, but if I were a lawyer I'd be leery of a DoV that was conspicuously not in your father's interest, but rather in your sister's.

However, if you think there's a fair chance that he'll survive two years you could always divert some of his investments into assets that will attract Business Property Relief from IHT.

I suppose that you could argue that if your father had been in the habit of gifting, you could carry on with it, if only to your sister. Basically you/he can make regular gifts of surplus income as long as he can cover his normal expenditure with the income left. I'd consult a lawyer if I were you; there must be well-known answers to what must be frequently asked questions.

le_loup

Notfarfromtheborder wrote: »

Thought of applying for 'Dead of Variation' through COP on his inheritance of £100K to avoid potential CGT of £40K as IHT planning

Definitely a no,no.
Your legal duty as an attorney precludes you from doing anything that would benefit yourself.

Biggles

kidmugsy wrote: »

Consider an Immediate Needs Annuity. If paid direct to the care suppliers the income is tax-free, and the beauty of an annuity is that it doesn't run out.

I'll second that, especially as your main aim is not to spend too much time managing his affairs.

I suppose that you could argue that if your father had been in the habit of gifting, you could carry on with it, if only to your sister. Basically you/he can make regular gifts of surplus income as long as he can cover his normal expenditure with the income left. I'd consult a lawyer if I were you; there must be well-known answers to what must be frequently asked questions.

You can make gifts to yourself as well. But, in both cases, you may be called upon to show that this was merely a continuation of an existing regular practice of his.

I certainly wouldn't waste money on employing a solicitor. Keep it simple.

xylophone

I would be surprised if you can arrange the DoV under your Power of Attorney.

If your father was in the habit of making regular gifts from income, or using up his capital gift allowance, then it seems to me that this could continue.

With regard to IHT, is there a spouse allowance to use?

As your father is self funding, is he receiving Attendance Allowance?

kidmugsy

Biggles wrote: »

I certainly wouldn't waste money on employing a solicitor. Keep it simple.

Keeping it simple and legal might involve paying a solicitor.