CGT IHT Nursing home fees and gifting

xylophone

£100,000?

Someone of my acquaintance is paying £62,000+ a year.......

euronorris

xylophone wrote: »

£100,000?

Someone of my acquaintance is paying £62,000+ a year.......

Highest I've seen, personally, is £96k per year. Greater London, VERY nice care home (has it's own salon etc, outstanding CQC ratings etc).


Prices, and service, vary greatly.

Keep_pedalling

xylophone wrote: »

£100,000?

Someone of my acquaintance is paying £62,000+ a year.......

Sounds about right, I have a "what if" budget of £60,000 a year for care requirements, but when I factor in income from pensions and attendance allowance it leaves a shortfall of £35k a year that will need to come from savings.

In an extreme example if we need 10 years of care between us that is £350k, and would still leave £1M to pass on tax free, and taking into account that £350K would be taxed at 40% should we not spent it on care the net reduction to our estate is £210k and for 10 years high quality care that sounds cheap.


Assuming the OP also has some decent retirement income, then they seem to be worrying over very little.

xylophone

It should also be remembered that care home fees tend to increase at rates well above inflation linked pension increases/AA increases etc.

xylophone

(has it's own salon etc,

There is a salon/manicurist etc available at my acquaintance's care home but these services are paid for in addition to the fees......

Keep_pedalling

patel007 wrote: »

You lot may not want to take my word for it, ie those that have worked all of their lives, own their property, never lived in a coucil home, never claimed benefits,
spent wisley, not thrown their money away and when they become ill and have to go into a care home, they lose most or everthing they worked for whilst the workshy lose nothing:

We live in a society that depends on lots of people working hard on low wages, in areas where they could never buy a house of their own or enter their senior years with large pensions or large pots of money to see them through. This includes the very people you may be depending on in your old age. I meet many care workers and I know very few of them will have the resources to pay for their own care if they ever need it.

In a fair society we need to make sure these people are looked after, when they can no longer look after themselves. The well off are in what most normal people would regard as the enviable position of being in control of there own fate. They wont need to jump through loads of hopes getting assessments and wait months for a place to become available, and they will not be given Hobson's choice in where they are looked after and by who.

IMO the limit of savings in which self funding kicks in is far to low, but it is never going to be raised to a level that would give you or I free health care and quite rightly so.

You original post also talked about CGT and IHT, which are things you can do something about, so my advice would be to forget all about something that may never affect you and concentrate on the 2 things that will, and can be mitigated with the right plans in place/

xylophone

They wont need to jump through loads of hopes getting assessments and wait months for a place to become available, and they will not be given Hobson's choice in where they are looked after and by who.

This is not necessarily the case for self funders - there is not an unlimited supply of places at suitable care homes......remember that needs vary and an assessment of those needs is usually arranged through the local authority.

Some care homes have waiting lists stretching over many months.

macca1974

Interesting thread. It is of course not great that care homes aren't paid for by the Government, but I'm not sure if any of the parties are interested in changing that.

I reckon that you have a couple of choices......

1 - Accept that if you need to go into a care home, you will have to fund it yourself.

2 - Make yourself poor and without resources, pay a load of tax and avoid care fees that might never happen.

I reckon at the age of 55 you have many years to go until you will need care. So if you did decide to give away assets now, its unlikely to come back to get you in the future re deprivation of assets (unless of course all the rules change in the next 20 years.

So....Put your three houses into a discretionary trust, where your children are the potential beneficiaries and you and your partner can't are not potential beneficiaries. I reckon that roughly you'd pay about £70K in capital gains tax on the BTL's and maybe £100K in entry fees into the trust. You'd also of course have to find somewhere else to live and rent for the future so that you don't have any assets and the POAT rules don't kick in. But on the plus side, any rent paid for the properties in the trust would be building up for your kids in the future and if you live 7 years you won't have to pay any IHT (although you'd need to be aware of the periodic charges and exit charges). You'd avoid all IHT and will probably have burnt through your £300K in savings to pay for your living expenses as you wouldn't have access to the rental income from your BTL's anymore.

That should then put you in the position where by the time you needed care you are in the position where you don't have any assets and the Government will cover it. If you still have two much cash left when one of you is getting ill, perhaps a trip to the Casino could see that off.

I'd probably go for the first option, enjoy the rest of my life safe in the knowledge that I'd built up enough money to fund my lifestyle, pay for any care that is required and still leave a boat load of cash for the kids. But each to their own....

AnotherJoe

Keep_pedalling wrote: »

Sounds about right, I have a "what if" budget of £60,000 a year for care requirements, but when I factor in income from pensions and attendance allowance it leaves a shortfall of £35k a year that will need to come from savings.

In an extreme example if we need 10 years of care between us that is £350k, and would still leave £1M to pass on tax free, and taking into account that £350K would be taxed at 40% should we not spent it on care the net reduction to our estate is £210k and for 10 years high quality care that sounds cheap.


Assuming the OP also has some decent retirement income, then they seem to be worrying over very little.

Is there a way to reduce or avoid tax if income from drawdown goes to care home fees?

Mojisola

I wonder how someone would feel if they managed to pass on most of their money to their children and ended up in an under-funded home functioning on council payments - having the children say "Can't visit next week, we're off on another holiday, spending all the money you gave us", "Do you like the new car we bought with the money you gave us", etc.