What can my mum do with her money?

James_Blonde

We live in Scotland. After a number of falls, I'll health and periods in hospital left her unable to cope, and on recommendation by social services and doctors, my mum has just moved into rented (housing association) sheltered accommodation with on site care. Her house sale is due to go through tomorrow which will mean she has savings of around £150k.

She obviously needs to be able to fund her rent and her care (offset by benefits at her assessed rate) but am I right in saying she can effectively do what she wants with the rest of that money?

Alter_ego

Don't forget her savings may affect her (means tested) benefits when declared.

What she did with her money may become pertinent if she requires LA funding for her care.

James_Blonde

The value of the house was taken into account when she was assessed (cash and assets above £28k I think?) and she does (I'm pretty sure, but not 100%) get some LA funding for her care... Obody has ever mentioned what she can or can't do with her money though

getmore4less

Key is Scotland different to E&W.

Alter_ego

Google - deprivation of assets.

I have no idea about Scottish law etc.

James_Blonde

Yeh, I did suspect Scotland being different might limit my responses a bit and am aware rules in England & Wales are more restrictive.

But for the purposes of moving this thread forward, let's for the moment pretend that my mums money is hers to do with as she pleases, as long as she can pay the bills.

She wants to spend some of her money - she's never had any as she's been constantly spending on buying a house and never really had spare to spend it or enjoy it.

I'd love it if she spent some of her money on nice things for herself! Only she says she doesn't want to - she wants me to spend it.

Now as far as I'm aware, the most she can gift me is £3k a year (£6k in first year). But I suspect she's going to end up buying "things" and giving them to me - there is precedent - she once bought me a second hand caravan I never asked for or wanted.

I don't want to screw either her over, or me over if she does end up buying me something expensive, and I need to make sure she's aware of this so she knows whether it's a stupid thing to do or not! I'm aware that gifts over £3k are allowed but may be subject to tax if she dies in less than 7 years, but that always seems to be in relation to inheritance tax and I know her assets are under the inheritance tax threshold. So how does that work?? I'm confused so don't really knoe what to say to her.

And that's assuming the money is really hers to spend in the first place!

onwards&upwards

Lol so the question is actually ‘how much money can my mother hand over to me?’

James_Blonde

There are 2 questions. Fundamentally, yeh, that's one of them.

Nobody will believe me if I say I'd rather she spent it on herself. I would - it's her money. I'd love her to have a nice holiday somewhere for example - she's never had one and I've been telling her for years even before her health deteriorated - but she won't and now her health means it would prove difficult. Her idea of spending money is going to the charity shop. I tried to encourage her to get some new furniture when she moved - she wouldn't. She's already said she'd rather I spent some of it. I've argued (really, honestly) but she's insistent and I reckon, given what's happened before, she'll do something off the wall if I don't have an answer for her. Yeh, part of me does have eyes lighting up in glee screaming "show me the money!" and buying things I don't need, but I know it's not that simple, and that money won't go far. I really just wish her and my stepdad had spent it on themselves in the first place.

And that's all assuming she can spend it as she sees fit in the first place!

Fire_Fox

"Nobody will believe me if I say I'd rather she spent it on herself."

We are far more likely to believe that if you are up front rather than skirting around the issue. You are not the only person with older parents who happen to be comfortably off!

AFAIK it would be better to do one off lump sum gift(s) to immediate family, which are certainly permitted as far as the taxman is concerned. That would appear more above board than drip feeding, which could easily look to the state like 'deprivation of assets'.

It would be worth reading official websites like Gov.uk or Citizen's Advice Bureau or Inland Revenue. And/ or your mother making an appointment with the solicitor to discuss her options as far as cash gifts/ update her will/ prepare Power of Attorney documentation. These are simply about making things much easier for you later down the line, not about the money itself.

HTH.

getmore4less

If all she has is £150k forget IHT and things like the 7y rule and £3k limits they just don't apply.

Worry about them if she wins the lottery.

I think you need to research the rules that apply and what is paid for and what is means tested,(benefits and costs)

This looks like a reasonable starting point.

https://careinfoscotland.scot/

Get an updated assessment of the benefits, income and outgoing.
Get the assessors to guide her on what she can do with the cash.

With savings rates being low an option that can work is she lends you a chunk of it.
(loans are not deprivation)

An example would be to payoff/down a mortgage of your own to reduce your outgoings, you then pay her back when she needs it.

getmore4less

Deprivation can be subjective.

One of lump sums that have no other purpose than to off load cash are more likely to be seen as deprivations.

In this case you can use IHT mitigation as the primary reason, someone with excess over their nil rate bands could offload for IHT and leave themselves plenty.

If someone has a pattern of giving like birthdays and xmas then proportional gift would be acceptable.