Giving it all away to avoid care costs

Alan_Cross

This is an academic question but I hope someone knows the answer!

What is the position with regard to local authority help with care costs if you have, in effect, given away most of your estate - house, savings etc. - to, for example, the kids?

I seem to remember that there is some kind of 'waiting period' like seven years before they recognise that the stuff genuinely belongs to someone else but I may be thinking of HMRC and Inheritance Tax.

I am not actually intending to do this but would appreciate being put straight by anyone in the know.

Nick_C

http://www.ageuk.org.uk/home-and-care/care-homes/deprivation-of-assets-in-the-means-test-for-care-home-provision/

dunstonh

Deprivation of assets is the term.

I seem to remember that there is some kind of 'waiting period' like seven years before they recognise that the stuff genuinely belongs to someone else but I may be thinking of HMRC and Inheritance Tax.

That is a potentially exempt transfer for IHT purposes. There is no 7 year rule on gifts to obtain benefits.

BobQ

Yes there is no 7 year rule on gifts to obtain benefits,

You are entitled to give away your money and assets but the Council will make an assumption that not a normal thing to do so will assume that you have deliberately deprived yourself of the assets. The onus is on the Council to prove it was deliberate but in practice they will expect you to give a good reason for what you did. If they do not accept your reasons, they will treat you as if you still had the assets when doing a financial assessment. If the person you gave the assets to still has them they may pursue them for the money.

Quite rightly they will take action if they think you have done this to avoid benefits. But it depends on what you have done, for example if you have shared a house with someone else for many years and the house is in your name transferring it to joint ownership might be acceptable if you had no idea that you were likely to need care, but doing it a few weeks before you go into a care home would not.

AnotherJoe

Putting it in a trust fund with a certain wealth company seems to be an efficient way of putting it out of reach of everyone, from what I read

Alan_Cross

AnotherJoe wrote: »

Putting it in a trust fund with a certain wealth company seems to be an efficient way of putting it out of reach of everyone, from what I read

Yes, I've also heard about trusts but I think it's just a tax thing, rather than anything to do with care costs, no?

PasturesNew

If you self fund, you go in when YOU need to/when YOU choose.
If you self fund, you go in WHERE you chose.

If the state pays you get put in as late as possible, long after the time when it would've been better for you.... it'll be traumatic and at very short notice, without you choosing anything about "where" you're put. In short, the first bed that's available in one of the homes that has a Council Account on their books.

Your money buys you choices....

westv

If anybody here wants to give it all away I'll be happy to assist.

BobQ

AnotherJoe wrote: »

Putting it in a trust fund with a certain wealth company seems to be an efficient way of putting it out of reach of everyone, from what I read

These are generally scams since they cannot protect you from deprivation of assets. If you give money to your friend or give it to a trust the result is the same , it is not your money and you have deprived your self of an asset.

Trusts work when you plan them well in advance so you can plausibly say it was not deliberate deprivation, but since most people do not go into care homes giving your assets to a trust means that you will most likely lose control of what you can do in the future and there may be other unforeseen consequences. .

Sea_Shell

PasturesNew wrote: »

If you self fund, you go in when YOU need to/when YOU choose.
If you self fund, you go in WHERE you chose.

If the state pays you get put in as late as possible, long after the time when it would've been better for you.... it'll be traumatic and at very short notice, without you choosing anything about "where" you're put. In short, the first bed that's available in one of the homes that has a Council Account on their books.

Your money buys you choices....

I agree 100% with this. Why would you want to give all your money away so that you could end up with rubbish end of life care. They'll only come after your family for top-up fees to get you a better room with a view anyway....assuming you don't want to be shoved in the broom-cupboard.

People seem obsessed with making themselves paupers in later life, to stop LA's getting their money.

Cutting of your nose to spite your face, comes to mind.

Malthusian

BobQ wrote: »

These are generally scams since they cannot protect you from deprivation of assets. If you give money to your friend or give it to a trust the result is the same , it is not your money and you have deprived your self of an asset.

Well, I could give my house to my friend and if I had a good reason for doing so and it wasn't done in anticipation of needing care, that's not deliberate deprivation. It's important to understand that there are no rules or taxes against making gifts.

The thing is that most people wouldn't give their house to their friend because their friend will want them to clear out of their nice new house. Or pay rent at market rates.

The scam arises when you tell someone that you have a marvellously clever scheme whereby you trustulate their house ("trust" works as a magic word in the same way that "God" does in religion, i.e. it explains everything but you're not allowed to ask how). The house is then no longer yours (and thereby you no longer have to sell it to pay for care) but you still get to live in it. You don't own it but you retain all the advantages of owning it. How? Trust! Derp.

The best case scenario is that when the time comes the council will look through this pack of horse---- and you will have to sell your house. The worst case scenario is that you won't be able to sell the house because you gave it away to the guys who arranged the "trust" and they have mysteriously disappeared out of the country, so you have no council funding and no money of your own either.