Can you create a trust to avoid losing inheritance to a means tested caring costs

Malthusian

andrew_hampshire wrote: »

I don't see how my question is any different to those avoiding inheritance tax!

Two reasons: 1) If you're trying to avoid inheritance tax you're trying to stop everyone else taking your money. If you're trying to get the state to pay for care when you have money to pay for it yourself, you're trying to take money from everyone else.

2) In general, measures taken to avoid inheritance tax do not leave the donor any worse off. As these measures may include giving capital away this is open to question, however to give two examples, one option is to invest in assets which are free of Inheritance Tax if held for two years - if you do this the money is still yours to cash in and enjoy if you later need it. Or if you take the rule on regular gifts out of income being free of Inheritance Tax (without the need to survive 7 years), one of the requirements is that the gift must not affect your standard of living.

In short, when you avoid Inheritance Tax, in most cases you benefit the children at the expense of the state, but dad is no worse off.

By contrast, trying to avoid care fees always makes dad worse off in order to benefit the children. Because, as discussed elsewhere in this thread, instead of spending their own money to enjoy their final years in maximum comfort they are at the mercy of council provision.

When someone asks how they can avoid Inheritance Tax you can expect some hostility, but mainly from those for whom the words "avoid tax" are a dog-whistle and who do not grok Lord Clyde's famous judgement (briefly paraphrased: no-one is obliged to order their affairs in order to maximise their tax bill). When someone asks how they can enrich themselves at the expense of their parents and the state you can expect pretty much universal hostility.

Person_one

Malthusian wrote: »

Two reasons: 1) If you're trying to avoid inheritance tax you're trying to stop everyone else taking your money. If you're trying to get the state to pay for care when you have money to pay for it yourself, you're trying to take money from everyone else.

Sorry, but trying to avoid inheritance tax is taking from everybody else as well.

If you're in the fortunate position of receiving a sum of money that you haven't had to work for, that is enough to have required that IHT be paid, you'll be getting a huge chunk of free cash and should have absolutely no complaints about a bit of it being redistributed for the greater good of your fellow human beings!

FBaby

No .... A lot of you are missing the point. The OP hasnt asked what are the benefits of private over council care homes .... nor did i (im already aware)

Indeed, he is asking for people to make it easy for him to guide him in doing something that most posters find amoral. If he wants a purely legal perspective rather than the point of view of posters, then he is better off paying to get the advice from professionals who don't care.

Keep_pedalling

Person_one wrote: »

Sorry, but trying to avoid inheritance tax is taking from everybody else as well.

If you're in the fortunate position of receiving a sum of money that you haven't had to work for, that is enough to have required that IHT be paid, you'll be getting a huge chunk of free cash and should have absolutely no complaints about a bit of it being redistributed for the greater good of your fellow human beings!

IHT certainly redistributes money hoarded during a lifetime, but so does taking positive action to reduce the amount your estate will end up paying. Unless we both spend a good number of years in care our estate is very likely to have to pay IHT, but we are minimiseing that by being generous to our children, charities and ourselves. All three of those things puts money back into the economy, and (hopefully) much sooner than it would via our deaths.

onlyroz

Popcorn time.

Can I suggest that your dad sells his house now and then set about spending all his money before he needs care? Perhaps a world cruise or two? Or maybe buy a few fancy cars? And then if he needs to go into care he can be sure to have no assets left, and will obtain a space in a bargain basement care home for free.

Another option would be for you to provide all care by yourself. However, I can assure you that giving up your job to look after an Alzheimers sufferer with no control over bodily functions won't be much fun. But hey, you'll get to keep all his cash when he pops his clogs.

Proxima_Centauri

I did warn you, OP...

getmore4less

Person_one wrote: »

Sorry, but trying to avoid inheritance tax is taking from everybody else as well.

If you're in the fortunate position of receiving a sum of money that you haven't had to work for, that is enough to have required that IHT be paid, you'll be getting a huge chunk of free cash and should have absolutely no complaints about a bit of it being redistributed for the greater good of your fellow human beings!

Using that argument all gifts should be taxed as well.
might as well go all the way and if you don't share the bill in a restaurant that a gift lets tax that as well.

The reality is hardly anyone pay IHT anyway.

rough numbers.

around 1/2m people die every year and less than 4% of estates pay any IHT.

Around 40% of the 8300 estates over 1 million pay no IHT.

in 2014
267,000 people reported estates of £77b to be passed on.
IHT total came to £3.4b.
5100 people paid £2.3b
14100 people paid the other 1.1b


(numbers a rough because not all estates go to probate even if taxable the actual estate values transferring will be much higher than 77b)

svain

FBaby wrote: »

. If he wants a purely legal perspective rather than the point of view of posters, then he is better off paying to get the advice from professionals who don't care.

Completely agree ... One of few sensible/helpful posts on this thread.

Person_one

getmore4less wrote: »

Using that argument all gifts should be taxed as well.
might as well go all the way and if you don't share the bill in a restaurant that a gift lets tax that as well.

The reality is hardly anyone pay IHT anyway.

rough numbers.

around 1/2m people die every year and less than 4% of estates pay any IHT.

Well, exactly! If you're in a situation where you will be receiving an inheritance from an estate that is liable, you don't have a great deal to complain about, financially.

Robisere

I looked after my parents in their Sheltered Housing flat until they both died, within 7 months of each other, after almost 63 years of marriage and being together since they were children. I had a responsible, managerial job with long hours, but I ran the house. I shopped, cooked, cleaned, washed, ironed and managed their financial affairs. I even bathed my dad in his last months as he died slowly of cancer. I did all of this during my late 30's and early 40's and it was b****y hard work, but I was honoured to do it and proud that I had given them back a little of what they had given me.

Your journey may be easier, but at the end of it you may have to ask yourself if you really did everything that you could have done for your dad.

I know that our ds & dd would do the same for us. That is how it should happen: it's called family life. It's the love and respect that all family members should have for one another.