Protecting savings from nursing home costs

summersetsheep

83dons it is not contentious because we are being 'funny' with you. Have a long hard think why it might be contentious.

You're basically trying to cheat the system and use taxpayer money. I consider it benefit fraud and close to scrounging.

There are serious moral and ethical dilemmas to what you want to do and I think by doing it, you're disregarding all the principles of common good and politeness of British culture out the window that make the country worse 'free for all'.

jamesd

83dons wrote: »

My relative is currently paying about 600 a month for council sheltered accommodation in Scotland which is fine. Should her health take a turn for worse she may require a nursing home which I believe can be expensive and the council will just drain her savings.

The first thing to determine is whether there is anything in her medical history which makes it predictable that she will at some point need nursing home care. If that is present it is too late to plan to avoid spending the money because the deprivation of assets rules would apply.

Options that can preserve more money for her estate include:

1. Investing well. This means things like not sticking to 1% or 0.5% savings accounts but instead going for things that pay 10% or more, sometimes tax free. VCT, P2P and pension contributions are all viable for delivering that sort of investment return, with low chance of significant capital loss depending on the investments chosen.

2. Freeing up assets to invest. If she knows that she will no longer need any former home she can get it done up to maximise sale value, sell it and invest the money.

3. Buying an immediate needs annuity. The lower life expectancies of people who buy these means that they can pay out substantially more than standard annuities. the payouts are higher the worse the health situation is. Typical life expectancies are in the two to three year range once residential nursing care is required and a sufficient income for life may be purchasable for well under £100,000, depending in part on how much the existing income is, since that affects how much topping up is needed.

If you can say more about her income and assets we could probably come up with some sort of plan to preserve as much as possible of her potential estate.

83dons wrote: »

What is best way to protect your savings to avoid them being touched by the government should a nursing home be required in the future? Give the assets to relatives now? Invest them in property here or abroad?

Before there is any sign of a personal need tfor such care, either boost income to pay for the care out of income or give away the money so that it doens't count. There are substantial risks involved in giving away the money. for example, she could need medical treatment not covered by the NHS and may die many years earlier than otherwise if the money isn't used to pay for that care. A child may be willing to do that but the spouse of a child who gets hit by a bus and remarries might not.

The 8 April 2013 rates for care in Scotland (page 34) that were agreed between a group of councils and care homes were:

£580.11 per week with nursing care (£30,165.72 a year)
£499.38 per week without nursing care (£25,967.76 a year)

If she could afford no nursing care costs the extra £80 or so a week, about £4200 a year, may not be too hard to provide for, particularly given the limited life expectancy when such care tends to be needed. Of course these charges are substantially more than £600 a month (7200 a year), though that may not include things like heating, lighting, water and Council Tax that would be included in care fees.

jamesd

83dons wrote: »

My relative is currently paying about 600 a month for council sheltered accommodation in Scotland which is fine.

She can also evaluate whether she wishes to continue to live in Scotland. Payments for care are not the same across the UK and are likely to differ even more significantly in Scotland soon. This could make it beneficial or detrimental to stay in Scotland. Picking the most favourable part of the UK to live in could provide substantial advantages to those who inherit from her.

saintalan

jamesd wrote: »

The first thing to determine is whether there is anything in her medical history which makes it predictable that she will at some point need nursing home care. If that is present it is too late to plan to avoid spending the money because the deprivation of assets rules would apply.....

Good post jamesd, nice to see somebody answer the OP with some facts and not abuse!

You infer in the quote above that if their is no bad history then Deprivation of Assets doesn't apply. What about old age and gradual infirmity?

Again, good post.

Alan

saintalan

Pincher wrote: »

...
Currently, if the parent(s) sign over the house, but still live in it, the HMRC says that is tax avoidance, so even if it's after seven years, you still have to pay inheritance tax.
...

Is this true? Isnt the tax just payable to some degree if they die before 7 years?

Or are you referring to the LA saying its Deprivation of assets which as far as I am aware has no bounds?

Thanks

Alan

xylophone

Is this true? Isnt the tax just payable to some degree if they die before 7 years?

Gift with reservation of benefit

https://www.gov.uk/inheritance-tax/passing-on-home

dunstonh

saintalan wrote: »

Good post jamesd, nice to see somebody answer the OP with some facts and not abuse!

You infer in the quote above that if their is no bad history then Deprivation of Assets doesn't apply. What about old age and gradual infirmity?

Again, good post.

Alan

The first post on this thread says she is in local authority sheltered accommodation.

Is this true? Isnt the tax just payable to some degree if they die before 7 years?

The 7 year rule never starts as it is a gift with reservation.

In respect of deprivation of assets, there has to be a reason for doing it that is justifiable. if the reason is to avoid means test then that would fail and the asset transferred would be pulled back into the means test.

saintalan

dunstonh wrote: »

The first post on this thread says she is in local authority sheltered accommodation.

...and?

The 7 year rule never starts as it is a gift with reservation.

Thanks already answered

In respect of deprivation of assets, there has to be a reason for doing it that is justifiable. if the reason is to avoid means test then that would fail and the asset transferred would be pulled back into the means test.

So who decides whether that last minute cruise was justifiable and if not what are they going to do?

Alan

Daniel54

saintalan wrote: »

...and?
You asked about old age and gradual infirmity.Sheltered accommodation suggests both of these factors may ( probably are) already a consideration

So who decides whether that last minute cruise was justifiable and if not what are they going to do?

My understanding is the LA makes that judgement,although quite rightly they can be challenged.

They could deduct it from the £ 23k minimum cap

There are undoubtedly grey areas in this and ideally the minimum cap would be greater.

As Jamesd suggested,the later in life actions are taken,the more likely they are to be viewed as deliberate deprivation.

In this case the OP has been overt about their motivations

redbuzzard

Perhaps not a practical solution for everybody, but my friend's mother is over 100, still living in her own home, with a live in carer who is paid a wage of about 40% of what a care home would cost, plus her keep.

She much prefers to remain in her own home.