How to best pass on my cash to my adult children

Neil_Jones

Meggy wrote: »

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?

I'm going to argue at this point that you need to have your own basic level of comfort for the here and now. You may find that you're fortunate enough to never need care and can still get out and about independently at the age of 97. That's brilliant if you get that far.

Your children probably won't be that fussed about the inheritance money even if they get £150k each or £2 each in 20 years time. They'll want to ensure you're happy now and if that means going into a decent care home as and when the time comes to ensure you're looked after then that's what they should do. If that's where all the money goes then that's where all the money goes.

The concept of depriving yourself now just to give your offspring a larger sum of money in the future is just, well, horrifying really. Please don't do it.

AnotherJoe

KeepOnKnitting wrote: »

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.

I think avoidance might be a reasonable if not "moral" position to take if council run/paid for care homes were of equivalent standard to private ones that councils cant afford.

Since however there's a world of difference between the two, and since paying privately gives control over location and facilities, then from a practical POV I think its arguable that anyone who voluntarily wishes to be moved into the former has lost it mentally, and the relatives should be able to take over and forcibly place them into a decent facility !

I'd have been horrified to have my mum in some squalid dump so i or my kids could get more money when she died, indeed i'd simply not have allowed it, and any kids that would allow it, shouldn't morally be getting the money.

Catch 22 in reverse perhaps. "Oh you want mums inheritance by putting her in a dump even if its what she says she wants? Well you arent worthy of it then we are spending your inheritance putting her in the Ritz of care homes "

sal_III

If your children are happy for you to live in a dump of a council funded care home, instead of a decent private facility so they can inherit £300k on top of your house, they don't really deserve the cash in the first place. Have you asked them about their opinion on the matter?

The money are not going to be "swallowed" if you go to a care facility, they will be spend by you to provide comfortable life for you.

Meggy

Yes, it was done with a solicitor 20 years and instigated by my wife when she became ill.

Aretnap

In addition to the points made above, is there any particular reason to believe that you will need residential care? For example are you in the early stages of a degenerative disease?

If so it is probably too late to do anything to avoid the means test, even if avoiding it were a good idea.

If not, keep in mind that most people never need residential care, and most of those that do have a stay of only a few months, which would not make a big dent in your savings anyway. Only a small minority of people end up spending years and years in a care home and run up six figure bills. You are potentially disadvantaging yourself out of fear of something which is unlikely to happen anyway.

Meggy

Thanks to all for information links and warnings. Am aware of deprivation of assets. The house was put into a trust via solicitor 20 years ago and so I hope this won't appear as deprivation of assets. Thanks for confirmation that if I do not reach the IHT threshold at the time then other things like allowances (or breaching them) become irrelevant. I will need to look at the paperwork on the house again and check if my benefit of living in it makes a difference. Thanks again.

falcieri

shinytop wrote: »

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:

I completely agree with this. I am having similarish discussions with my parents about their financial situation as they get older. I would never let them put themselves into a lower standard of living just so I could benefit from the money.

Malthusian

Meggy wrote: »

Thanks to all for information links and warnings. Am aware of deprivation of assets. The house was put into a trust via solicitor 20 years ago and so I hope this won't appear as deprivation of assets.

Why was it put into trust?

Skibunny40

To take a slightly opposing view, if the OP wants to give money to his children now rather than wait until it's an inheritance then surely that can be done without him ending up in a state-run dire care home? What about giving £150k to the children now so thre OP gets the pleasure of helping his children and retaining the rest as a "care fund"? If care home costs average around £50k a year, that covers at least three years not including any pension income ( which I'm guessing is decent, if OP is already giving gifts out of income on a regular basis) and the chances are the OP will never need to go into a care home anyway, although the "care fund" could and should be used for care at home.
Any reason this wouldn't work?

Albermarle

o take a slightly opposing view, if the OP wants to give money to his children now rather than wait until it's an inheritance then surely that can be done without him ending up in a state-run dire care home? What about giving £150k to the children now so thre OP gets the pleasure of helping his children and retaining the rest as a "care fund"? If care home costs average around £50k a year, that covers at least three years not including any pension income ( which I'm guessing is decent, if OP is already giving gifts out of income on a regular basis) and the chances are the OP will never need to go into a care home anyway, although the "care fund" could and should be used for care at home.
Any reason this wouldn't work?

I agree with these sensible comments . . With £300K and pension income the OP could give his children some money now and keep enough to fund care costs later . A nice compromise .