Deprivation of assets query

Mojisola

solanum55 wrote: »

She has a bungalow worth £220,000 which now needs to be sold.
If she sells it and adds the money to her savings that will total £370,000 in savings.

She could just leave it sat there doing nothing much or she could use some of it to help her grandchildren with the deposit to get on the housing ladder.

With her pension income, even if she needs to go into full care home costs, her savings will self fund her for approx 8 years (to age 96).

The test for deprivation is whether someone has given away capital in order to be able to claim benefits.

Having done the sums as you have, it would be hard for the council to argue that the money was given away with that intention.

Personally, I'd get all the figures written out and stored somewhere in case the decision is challenged in the future and take the chance on giving the money and enjoy seeing the youngsters get a good start in life.

Farway

A bit OT, but from the sums Death Duties will may need to be be a factored in, 7 years from the gift I believe

moneyistooshorttomention

Silvertabby wrote: »

If you think there's any chance that your mum will need nursing home care in the future (only about 30% of elderly people actually do) then she will need this money to pay for her care.

Otherwise, let her give her money away - with your assurance that you will take her into your own home to care for her if needs be.

Re the "only about 30%" = is that a typo?

Personally I'd put "only" in front of 0.3%. At most 3%. 30% is a heck of a lot that do....:eek:

Keep_pedalling

solanum55 wrote: »

Hello,
Thank you for the comments, it may be more help if I am more specific with facts and figures.
My Mum is 88 and now lives in Abbeyfield Sheltered Housing with a carer coming in to help her bath shower, she can pay for this from her pension income and her cash savings.
She has approx £150,000 cash savings which in sheltered housing will last her a long time.
She has a bungalow worth £220,000 which now needs to be sold.
If she sells it and adds the money to her savings that will total £370,000 in savings.
She could just leave it sat there doing nothing much or she could use some of it to help her grandchildren with the deposit to get on the housing ladder.
With her pension income, even if she needs to go into full care home costs, her savings will self fund her for approx 8 years (to age 96).
So does she help the grandchildren now or just sit on a pile of cash?
Thanks

How big is the income shortfall that causes her to use her saving to pay for rent / home care?

Mojisola

Farway wrote: »

A bit OT, but from the sums Death Duties will may need to be be a factored in, 7 years from the gift I believe

If solanum55's Mum has any spousal exemption to carry over, inheritance tax might not be a problem.

solanum55

Many thanks for all the comments, I now have a much better idea of the situation, it looks like Mum should hold back a fair bit of her money but can give enough to the grandchildren to help them with deposits for houses.
In her current sheltered housing situation her income shortfall is about £3000 per annum and so on this basis she can self fund herself for a long time. Of course things can change but at the moment the present set-up looks to be OK.
As far as the comments on inheritance tax are concerned, I was under the impression that as any money from the bungalow was going to Grandchildren then the Residents Nil Rate Band would apply giving a total inheritance tax threshold of £450000 for 2018/19 (the tax year in which her bungalow will be sold), in which case whatever happens we would be below inheritance tax considerations.
Thanks

getmore4less

Mojisola wrote: »

If solanum55's Mum has any spousal exemption to carry over, inheritance tax might not be a problem.

RNRB takes care of the excess over £325k talk of IHT, PETS, 7 years is all redundant.

alanq

solanum55 wrote: »

With her pension income, even if she needs to go into full care home costs, her savings will self fund her for approx 8 years (to age 96).

Care home places are becoming scarcer and demand is rising. Have you taken into account that future costs may be somewhat higher than today's?