Deprivation of assets

pmlindyloo

Polly_Sparky wrote: »

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.

Thank you for 'filling in the gaps'.

I am not sure how you are interpreting your MIL's wealth.

Can she make all the payments/gifts out of her monthly income or is she decreasing her savings to cover these?

My opinion was that if she can continue to make the monthly gifts to her grandchildren and make birthday etc gifts throughout the year from her monthly income (ie. without touching the savings) then this could continue.

My reasoning being that she can afford to do this out of her pension(s)/other income without touching the savings. If she was managing her own financial affairs then she would be continuing to do so.

To prove deprivation of capital it has to be done intentionally to reduce the amount paid towards care home fees.

BUT I am not the decision maker

Perhaps on a moral issue another question would be to ask if this money that she gifts monthly to the grandchildren is really needed or whether it could be better spent on more care for your MIL.

We could go round in circles with this one so I suggest you contact the Public Guardian Office by email for their opinion re gifts/amounts etc, and keep a copy for future reference.

https://www.gov.uk/government/organisations/office-of-the-public-guardian

laidbackgjr

Based on assets of £270k and a reduction in this of £300 per month - that covers 75 years before the assets are gone.

If care costs increase further - how long do you think the assets would last - if it's 5 years or less I'd suggest you need to cut back on discretionary spend now - but if even full time care would see the £270k last 15-20 years, I think you would not have an issue.

But ultimately there is no simple yes / no figure - they key to a successful deprivation of assets claim is proving intent to give away wealth rather than use it to pay for care.

pmlindyloo

Polly_Sparky wrote: »

Her wealth is being reduced by about £300 per month. It wasn't before the care bills but it is now.

So currently her wealth of 270K is being reduced by about £3600 per year.

In that case then I would certainly stop the monthly payments to the grandchildren.

Linton

I believe the key factor is whether your MIL has the mental capacity to handle her own financial affairs. If not, under the mental health act 2005 gifts can only be made by an attorney "on customary occasions", eg birthdays, weddings, wedding anniversary or similar and must not be of unreasonable value under the circumstances. Anything beyond that has to be approved by the Court of Protection.

If she still has the capacity then she can decide to carry on making the gifts. Whether she should is another matter.

Daniel54

I am in a very similar position.

Gifts to 4 grandchildren and my sister ( who is joint attorney) were set at least a decade ago.When my father died she ceased the gifts to charity but maintained the gifting to family as above.Although she has since lost capacity,these gifts continue to be easily affordable from income.

Her care ( at home) has been largely paid from capital - they were over £6k a month in the past year ,although we now have CHC.

I took the view,which I believe is consistent with the link posted by pmlindyloo,that her income and assets ( capital and house) would fully pay for her care until she was well over 100.I haven't made any new gifts of any type since she lost capacity to make her own decisions,but I don't think the comparatively small regular gifting could be viewed as deliberate deprivation over 10 years down the line,nor in contravention of my duties as attorney.

What is clear is that this is a matter of judgement and each individual circumstance.My mother's situation is not exactly the same as the OP's,so I will set it out so that this might help ,as there is no doubt that the POA is being taken seriously.

Regular Gifting : £225 per month

CHC contribution :£450 per month ( CHC does not cover full care cost)

Income (including AA) : £3100 net per month

Capital £ 10k ( was over £200k)

House : circa £400k

My view is that with the current depletion rate of £350 per month and assets of £ 270,000,the OP is most probably safe from deprivation of assets ,but this might depend on a) mother's monthly income from pensions and b) increase in future care costs,when the gifting might need to cease as they become less sustainable

Hope this helps

Polly_Sparky

2 or 3 years ago her monthly income exceeded her monthly outgoings by about £400 so she decided to gift £250 per month to her 5 grandchildren (total)

since then her care costs have increased as her Dementia has progressed and she's now spending £1000 per month on care so we currently are at a point where her monthly outgoings exceed her monthly income by about £300

this means we have to top up her current account each month from her savings

her wishes would still be the same. That she helps out her Grandchildren. Should we as her attorneys still comply with her wishes even though we can see that her wealth is reducing?

Linton

Polly_Sparky wrote: »

her wishes would still be the same. That she helps out her Grandchildren. Should we as her attorneys still comply with her wishes even though we can see that her wealth is reducing?

As I said previously the key factor is whether, in your opinion, she still has mental capacity to make her own decisions. If she has, you should follow her wishes, though of course you may try to get her to change her mind. If she hasnt, you make the decisions but your freedom of action is limited under the Mental Health Act.

If you had the old Enduring Power of Attorney you would have to register the Attorneyship with the Court of Protection when she lost mental capacity. However I dont know if there are any hoops you need to jump through with the modern Lasting Power of Atttorney. From a quick Google it may be the same process assuming the LPA was set up whilst she had capacity.

Polly_Sparky

She filled in the old EPA herself about 20 years ago. We recently got that registered with the OPG .

Linton

Polly_Sparky wrote: »

She filled in the old EPA herself about 20 years ago. We recently got that registered with the OPG .

In which case I believe you do not have the authority to continue making monthly payments except with permission of the Court of Protection. Just birthdays etc - see here. MILs purpose may not have been IHT as described in the document, but the document clearly defines what gifts are appropriate.

Polly_Sparky

Appreciate all the comments, I was expecting different views, opinions, interpretations.