Helping single son to pay his bills possibly long term

squidlydiddly2

My son age 45 suffers from slight mental problems. He lives on his own, is self employed but work has dried up due to the coronavirus and other factors and he has difficulty sorting out his finances. He has a mortgage of about £110,000 and my wife and I helped him with his deposit in 2009 with £60,000. His property is valued now at about £300,000.

We urgently need to help him out again financially and could, at a stretch, afford to pay off his mortgage. My wife and I have been retired for nearly 15 years and do not know the rules regarding helping out in these circumstances especially the tax consequences.

We may need to pay his bills for a while with money that at the moment we can do without for our own day to day living. Our questions are: if he contacted his suppliers, bank, mortgage company, gas, rates, credit card, phone etc telling them we could co-handle his accounts on his behalf are they obliged to let this happen, is it a good idea? What are the possible tax consequences of our doing this? and what organisation could we approach to help get him out of his dilemma?

Many thanks….

Grumpelstiltskin

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p00hsticks

There's no tax on gifts in this country - you can give whatever you want. There is one proviso - you say that it's money that 'at the moment we can do without'. If in the near future you might need to claim means tested benefits or need local authority funded care, the gifts could be treated as a  'deprivation of assets' and you'll be assessed as if you still had the money rather than had given it away.

Are the bills paid for by direct debit ? If so, then I think the simplest thing might simply be to switch the relevant payments to come out of your bank account rather than his. I doubt that they'll be concerned about who's paying the bills as long as they're getting paid. I'm not an expert but I don't really think there's any need for you to be officially 'co-handling' his accounts in order to do this, and I suspect that - unless you want to set up a Power of Attorney to offically act for your son - it may not be something the comanies would accept or could handle.

I'm not sure what you mean by 'what organisation could we approach to help get him out of his dilemma?'

If you are referring to his drop in income due to the coronavirus, then it might be worth asking over on the benefits board if theres anything he coudl claim (there may already well be others asking simiar questions). If it's more generally the issue of him not managing to budget or control his finances then perhaps one of the debt charities ?

maman

Without sounding morbid, I thought there was an issue with gifts if you died within 7 years?

onomatopoeia99

maman said:

Without sounding morbid, I thought there was an issue with gifts if you died within 7 years?

They are considered part of the estate for IHT purposes so if the estate is over the IHT threshold then tax may become a factor.

mwarby

Re the mortgage, he should probably make contact with mortage comapny himself, he should be able to get a 3 month holiday, this will make other bills more manageable. You mention credit card, are you and he comfortable that he's living within his means(during normal times at least), if he isn't adding more money may not be the solution