Deprivation of assets

Polly_Sparky

Not to get confused with IHT. MIL has bungalow worth 200k & savings of appx 70K so no IHT liability.

She is 87 and may need to go into residential care at some point - so I am thinking about Social Services funding in years to come if her wealth has reduced below £23k

My question is:

She has a diagnosis of Dementia. Her wealth was increasing year on year so she decided to gift to her grandchildren £50 each per month to help them with London costs = £3k per annum

Recently things have changed. We have put in more care which she self funds and which means her wealth is now reducing by about £300 per month. Her Dementia is progressing and we now have POA.

As attorneys and as we know her wealth is reducing, should we stop the regular gifts to her grandchildren?

If we stopped the regular gifting - is it okay to still give Christmas/Birthday presents & to what value is deemed acceptable.?

Also, she donates by DD to various charities. Should we stop those?

We are her only two Attorneys - Son & Daughter in law

Newly_retired

Does she live alone? If so, then the value of her house will come into play.
Either it would have to be sold, or it could be rented out to provide income to pay fees.
( Unless she is deemed eligible for continuing health care NHS funding?)
So it could be a while before she reaches the £23k threshold.

pmlindyloo

I think you might find this link useful

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/457921/PGnote_2012_02_gifts.pdf

BobQ

I suspect that the OP realises that the house will be taken into account if his mother goes into care.

There is no easy answer to the OP's question but the safe option is to accept that having a POA has the obligation of using her money in her best interests and stop all unnecessary payments. I would stop the charity donations if your mother's wealth is declining.

As to payments to grandchildren. How bad is the dementia?. If your mum is a little forgetful but does understand what is going on some of the time it might be OK if it is what she wants , but I would say that once she is no longer capable of expressing a view without prompting or does not understand the impact of gifting money you should stop the payments.

Another view is that if she is otherwise in good health and likely to live a few years you should be conserving every penny you can so that she gets the best value from it.

Keep_pedalling

It sounds like the regular gifts were coming out of income, and have been established for some time so as attorneys you can reasonable justify continuing those payments without fear of being accused of DoA, however your duty is to manage her finances for her benefit alone, so as her care costs rise then you may need to cut these other outgoings to maintain the best possible level of care for as long as possible.

BobQ

pmlindyloo wrote: »

I think you might find this link useful

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/457921/PGnote_2012_02_gifts.pdf

Useful guidance albeit with the usual latitude in deciding what is reasonable.

I think my post above is consistent with this. The issue that I think the OP needs to focus on in this case is what his mother's future needs are.

Yorkshireman99

Polly_Sparky wrote: »

Not to get confused with IHT. MIL has bungalow worth 200k & savings of appx 70K so no IHT liability.

She is 87 and may need to go into residential care at some point - so I am thinking about Social Services funding in years to come if her wealth has reduced below £23k

My question is:

She has a diagnosis of Dementia. Her wealth was increasing year on year so she decided to gift to her grandchildren £50 each per month to help them with London costs = £3k per annum

Recently things have changed. We have put in more care which she self funds and which means her wealth is now reducing by about £300 per month. Her Dementia is progressing and we now have POA.

As attorneys and as we know her wealth is reducing, should we stop the regular gifts to her grandchildren?

If we stopped the regular gifting - is it okay to still give Christmas/Birthday presents & to what value is deemed acceptable.?

Also, she donates by DD to various charities. Should we stop those?

We are her only two Attorneys - Son & Daughter in law

Deperivation of assets does not seem to be the issue in this case. The crucial thing is that attorneys must only spend money that directly benefits the donor. Small traditional Christmas and birthday gifts are allowable but I very much doubt that the £50 per month is. Likewise the charity donations are hard to justify. You need to remember that you may be asked to repay them is they are found to be excessive.

pmlindyloo

Although I accept that the link is indeed a little 'wooly' about amounts I think the general principles are spot on.

You must act in the best interests of the donor and provide for their needs.

Gifts and donations should be made with due regard to the financial situation of the donor.

We do not know how much income the OP's MIL is getting each month. If it is a relatively large sum and all her needs can be provided and she can continue to make gifts and donations to charities as she always has done then I do not see a problem with this.

When assessing for care needs her bank statements would be looked at. Therefore any largish sums coming out may be looked at.

If the MIL can manage on her monthly income continuing as she always has done then this goes with the spirit of providing for her needs and also carrying out her wishes. (which is just as important)

If her care needs costs increase then the monthly gifts to the grandchildren would be the first to go and then the 'occasions' gifts lessen in amount in proportion with what is affordable.

Savings could be used for a funeral plan, equipment necessary for her needs etc.

I do not think that it would be expected that anyone should have to actually start saving for their possible care in the future. After all it may not happen.

As regards the house it may not be used in the assessment of her finances for a possible care home. The house may already be in a property trust created years ago.

Plus, if her monthly income is quite high and the house can be rented out it is even possible that she would be able to afford care home fees without resorting to selling. Perhaps the OP can do some research about this.

BobQ

pmlindyloo wrote: »

If the MIL can manage on her monthly income continuing as she always has done then this goes with the spirit of providing for her needs and also carrying out her wishes. (which is just as important)

We do know that "We have put in more care which she self funds and which means her wealth is now reducing by about £300 per month"

So I think it is reasonable to infer that he lady's income is insufficient for her current needs if her wealth is declining by this amount.

I do not think that it would be expected that anyone should have to actually start saving for their possible care in the future. After all it may not happen.

Someone of sound mind should not have to start saving, but this is about someone acting under a PoA. Unless there is medical evidence that "it may not happen", I think it is reasonable to assume that it will.

As regards the house it may not be used in the assessment of her finances for a possible care home. The house may already be in a property trust created years ago.

Pure speculation, not mentioned in the OP.

pmlindyloo

Perhaps then we ought to wait until the OP fills in the gaps.

I'm sorry you think that I was speculating.

When full details are not given then it is reasonable to speculate in my opinion.

OP, do make sure that your MIL has put in a claim for Attendance Allowance if she is not already receiving this.

Polly_Sparky

Thank you everyone, interesting reading, I'll try to fill the gaps:

Her monthly care costs are currently appx £600 per month and together with all other expenses (including grandchildren gifts and charity donations) she is now reducing her wealth by appx £300 per month. Prior to putting daily care in, her wealth was still growing. The grandchildren gifts were out of income and did not affect her wealth.

The question of whether she will need residential care is impossible to answer, she is 87, was diagnosed with Dementia 4 years ago and is becoming more & more frail.

She does live alone, widowed over 30 years ago. House is not in trust.

We do realise the house (or rental income from house) would pay for care if she didn't qualify for CHC (And I know how difficult that can be)

She does receive AA thank you. Also Council Tax Exemption as she has "severe mental incapacity" as they call it. The GP signed a form to confirm she has Dementia.

Another relevant point. Her 5 grandchildren will be the sole beneficiaries of her estate. MIL changed her will to this effect 20 years ago with our full knowledge and support. We have 3 children, her other son has 2. She has been gifting to them for about 2 years now.

If we continue to allow the monthly gifts to the grandchildren it could be possible that in many years to come social services say we shouldn't have & then as attorneys we would be responsible for the social care bills. We want to avoid that scenario.