Early inheritance query (Please help!)

leeoka

Hope someone can help with this?

As an only child my mother & father naturally wanted to make sure that I received their house when they passed away......

Unfortunately my mother passed away 2 years ago leaving my father behind; to cut a long story short I have had to move my father into a sheltered bungalow owned by the local authority........bear with me, this is not the problem.

We have just sold my fathers house and he has ended up with 100K. He now has to pay for his rent/poll tax and loses his pension credits, this is all fine.

What I/we would like to do is move my fathers money into somewhere that I/we still have control but it cannot be touched if he goes into care. He is self sufficient at the moment.

I understand about the seven year thing but any advice or help would be much appreciated.

I seem to keep getting conflicting information, he can give away 3K/annum? 7K/annum? or an immediate amount 16K?

Confused, please help......

noh

Your father can give away as much as he likes but it will have no effect on wether that money is taken into account when assessing means tested benefits for care home fees. In short what you are proposing is not legally possible. See deprivation of assets on page 20 of this leaflet from help the aged.
http://www.helptheaged.org.uk/NR/rdonlyres/7C5E3999-2AED-4B59-ABC2-7391DAFE9F46/0/paying_for_your_care_home_is.pdf

Nigel

dunstonh

It's too late. Once your father enters local authority care, any assets at that point given away or invested in a tax wrapper that isnt included in the means test is still taken into account. It would be considered deprivation of assets and attempting to do that knowingly could lead to prosecution.

These options are available before local authority care is required but not once it is already known to be required.

I seem to keep getting conflicting information, he can give away 3K/annum? 7K/annum? or an immediate amount 16K?

You are talking about inheritance tax here and not local authority care.

leeoka

Thanks for your replies...

Is he classed as being under local authority care?

He is in his own bungalow and has a warden check on him twice a week.

Is inheritance tax payable on less than 100K?

dunstonh

If you "get rid" of his assets, then you would no doubt be claiming for benefits. That is where you would fall foul of the deprivation of assets rule.

Is inheritance tax payable on less than 100K?

Its not. So there is no point you worrying about things like gift allowance.

noh

No inheritance tax is payable on estates under £300k. As your father has approx £100k inheritance tax is not relevant.
As stated in the document I linked to, if the council believes that deliberate deprivation of assets in order to reduce or avoid care home fees has taken place, then it has the power to treat the person as still owning those assets. Its the intention not the timing that matters.

Nigel

leeoka

Sorry for sounding stupid....

Am I right in assuming that:

My father does not fall into the gift allowance bracket as his assets total less than 300K?

He can do what he wants to do with his money (as long as he doesn't give it all away to claim benefits!)

Would I have to pay tax if he was to give a portion of it to me, say 30K? (I am a 40% tax earner)

dunstonh

Its the intention not the timing that matters.

Timing does come into it. If you place money into an investment bond 2 years before, then providing no documentation exists that says you did it for the purpose of gaining benefits and you dont say it was then you shouldnt have a problem. However, putting money into an investment bond after the event is too late. It doesnt matter if you are doing it for genuine reasons or not

noh

dunstonh wrote: »

Timing does come into it. If you place money into an investment bond 2 years before, then providing no documentation exists that says you did it for the purpose of gaining benefits and you dont say it was then you shouldnt have a problem. However, putting money into an investment bond after the event is too late. It doesnt matter if you are doing it for genuine reasons or not

I know you have more experience in this than me but the information leaflet I linked to indicates there is no time limit. Intention is the key.
More info here http://www.friendsprovident.co.uk/doclib/ctst18.pdf

Nigel

noh

leeoka wrote: »

Sorry for sounding stupid....

Am I right in assuming that:

My father does not fall into the gift allowance bracket as his assets total less than 300K?

He can do what he wants to do with his money (as long as he doesn't give it all away to claim benefits!)

Would I have to pay tax if he was to give a portion of it to me, say 30K? (I am a 40% tax earner)

Yes.
He can do what he wants with his money.
He can give you any amount no tax would be due on the gift.
If he later needed to claim means tested benefits any money he has given away may be taken into account and treated as if it was still his.


Nigel

leeoka

Thanks all, I think you've more than answered my initial question

:beer: