How to best pass on my cash to my adult children

Meggy

I am 80 years old and have approx 300K in savings and investments. On birthdays and at Christmas I give monetary gifts to my 2 children at the level of the annual HMRC allowances and some regular monthly small sums out of current account. I am widowed and my house is in trust with my children as trustees. My problem is how to pass on the large sums in savings and investments that could get swallowed up if I had to go into a care home, for example. I have discussed using the house to help pay for any care in future but I cannot see how I could protect the money I would like my children to inherit. I do not believe my estate would be come under inheritance tax payment so does this mean I am free to just give large sums to the family now? or does the 'counts within 7 years of death' thing still apply?

Albermarle

Gifts within 7 years of death will be counted when adding up your total estate for IHT purposes . However if you still do not then reach the IHT threshold then it will not matter about the gifts .
However if you go into a care home and wish to have council funding then the gifts will be looked at to see if you deliberately reduced your assets, so the council has to pay rather than you .
If you go into a care home but privately fund yourself anyway then it is not an issue.
In any case you would not want to go into a council care home if you could afford not to .

I am not sure about the issues about the house being in trust but the council might also take a view that this has also been done deliberately to avoid it being used to pay care home fees , especially if you are still living there.

eskbanker

Meggy wrote: »

my house is in trust with my children as trustees.

[...]

I have discussed using the house to help pay for any care in future

You've presumably engaged with a solicitor or similar to set up the trust arrangements so I'd suggest asking them (or their recommended tax adviser) about how best to plan around IHT issues - apart from anything else such trusts are often set up specifically to avoid a house (that you no longer own) being used to fund care costs, so it's not obvious how that would fit together.

In the mean time it would be worth reading up on 'deprivation of assets' to familiarise yourself with some of the key issues involved....

xylophone

https://www.cii.co.uk/learning-index/articles/asset-protection-and-probate-trusts/68038

may be worth a read.

Malthusian

My problem is how to pass on the large sums in savings and investments that could get swallowed up if I had to go into a care home, for example.

Giving away money to your children in the hope that the council will dump you in Overmydeadbody Grove at the taxpayer's expense won't work. You would be assessed as if you still had the money and your children would become liable. You need to read up on "deliberate deprivation".

Have you considered selling your house and moving to a horrible damp-ridden bedsit in Stoke so you can give your children the surplus?

If not, why do you think you will later want to compromise your own standard of comfort for the sake of your children's inheritance?

I do not believe my estate would be come under inheritance tax payment so does this mean I am free to just give large sums to the family now? or does the 'counts within 7 years of death' thing still apply?

If Inheritance Tax would not apply on your death then the 7 year rule, the allowances and the rest are completely irrelevant to you.

I am widowed and my house is in trust with my children as trustees.

This needs to be reviewed.

It is not clear what you mean by "in trust" but if you gave away the house, or your Will leaves it to a trust instead of direct descendants, you may be forfeiting the Residential Nil Rate Band.

Reaper

As above the "House in trust" schemes have got a bad name recently. The good news is your children are the trustees unlike at least one bad scheme where the high pressure sales company made themselves trustees, so at least your family have kept control.

The bad news is it probably won't work
https://www.telegraph.co.uk/equity-release/mortgages/warning-trust-schemes-supposed-help-families-avoid-paying-care/

shinytop

OP, it's worth looking up the stats on how long people stay in care homes and the monthly cost. I think that given the amount you have, the chances are you would still be left with a substantial amout to pass on even if you had to pay care home costs. Personally, I would be horrified if my elderly father deprived himself of better care just so that I could inherit more. As far as I'm concerned he should spend everything he needs to and come to me for more if it runs out.

Not a recommendation but I know of one elderly couple quite close to me who (literally) gave their kids envelopes full of cash every Christmas.:eek:

Tom99

Pay a visit to some local care homes and compare.

AnotherJoe

Have you considered selling your house and moving to a horrible damp-ridden bedsit in Stoke so you can give your children the surplus?

^^^^^^^^^^^^^ this

I can only hope that when I'm 80 I've retained enough marbles to see the sense of moving into a decent care home with good facilities instead of being dumped into the cheapest wee-smelling dump so my kids can spend my money instead.

Anonymous101

It seems I share an opinion with many of the previous posters. I really can't see why anyone would want to sacrifice their comfort in the last few years (or months) of their lives just for the sake of giving their children more money. Presumably they aren't destitute or homeless at the moment. If they've managed without £300k windfalls thus far I'm sure that they'll manage without one now.


I've had several conversations with my parents whom are in their 60's about this. They've worked hard to put themselves in the position they're in and they should be using that money to enjoy themselves or at the very least make sure their basic needs are met. Why on earth people consider allowing their parents to put themselves into the hands of the local authority is beyond me.

KeepOnKnitting

Anonymous101 wrote: »

Why on earth people consider allowing their parents to put themselves into the hands of the local authority is beyond me.

I would actually take this one step further. Why on earth people who have been proudly independent and worked for their money up to retirement are thinking that they should give all that to their children and expect the state to pay for their care in their final years is beyond me. State care is there for those who can't pay, not for those who chose not to.