Care home fees - can we legitimately dispose of some savings?

Savvy_Sue

If, at the time you bought your child a house, it was apparent that at some point in the future you would / probably would need care, then the LA might argue it was deliberate. There's nothing hard and fast. 

For example, DH and I are reasonably fit and well: I don't feel it's inevitable we'll end up needing care (and don't forget this might apply to help at home, not just residential care). BUT suppose either of us had a debilitating / deteriorating condition like fybromyalgia, RA, ME, MS, or a serious disability. While either of us might be able to look after the other now, in 20 years time it could be a very different prospect. I think at our age, my parents were still reasonably fit and active: 10 years later not so much, 20 years later barely leaving the house unless picked up by car. 

And what you gave away would also, I believe, come into the equation. Gifted a deposit of £50,000 to a child out of a sizeable inheritance when fit and well? less of a problem than buying the whole house, swallowing the entire inheritance. 

But I will ALWAYS want to hang onto enough to pay for a good care home, if I possibly can ...

Keep_pedalling

There is no time limit on DOA, each case would be treated on its merits. Some cases would be straight forward such as gifting your home or putting it in trust while still living in it, there simply is no other sensible reason to carry out such a move and it is likely to to be treated as DOA regardless of when it was done. Giving away a portion of your assets to help children get on the property ladder or to reduce IHT is not going to been seen in the same light  as the gift in both cases had a clear purpose other than avoiding care costs.

Not all cases are going to be so clear cut.

badmemory

From what I have seen different LAs have different timescales for DOA.  But avoiding care costs.  If it is you who is going to need the care?  Are you sure you want to go there?  I must confess to mixed feelings here though.  The best round here was scrupilously clean & absolutely no "old people smell" but it felt like being in prison.  Room doors locked so inmates (that is what it felt like) could not leave their rooms without permission.  The next best was one that charged the same for LA only as for paying privately, which believe me is a rarity.  One was charging more than double, the stench was unbearable.  So if you are going to bother visiting do you really want to be subjected to the stench, this was true of both the most expensive & the cheapest one!

If there is enough left available for 3 to 4 years fees including income for the period then you are unlikely to have much to worry about.

But & it is a big but, why should I pay towards your care that you could have paid yourself when I have made provisions to pay for my own care.

Brynsam

Mickey666 said:

Out of interest, how far back does this 'deliberate deprivation of assets' thing go?

I can see that giving everything away the week before someone needs a care home is likely to be deliberate, but what about the year before, or five years, or 10 years?  Supposing a parent bought their child a house 20 years ago, that would clearly be deliberate and it would deprive themselves of assets (the sort of thing that parents often do) but how would this be regarded by 'the powers that be' when it comes to care home fees?  How is anyone to know if they'll need a care home in the future?

After the events of this year and their impact on the economy, LAs will be looking even harder for every last penny of savings, so expect the look back to get longer and more stringent. People like the OP in this thread are going to be sorely disappointed if they think they can preserve their inheritance by expecting others to pay for care of their aged parents.

Mickey666

Interesting.  I wonder how long it will be before the taxman cottons on to this ‘deprivation of assets’ thing.  Why does it seem to be generally acceptable to avoid IHT by making various financial arrangements (ie basically giving away money and assets as PETs) but it’s generally frowned upon to make similar arrangements to avoid care home fees?   Perhaps councils should be limited to searching back only seven years for deliberately ‘deprived assets’, making it similar to the PET thing.

nanapop1977

My husband and I are in our 60s and quite comfortable in that we own our home, both have good pensions and have a bit in the bank. We are about to inherit a sizeable sum from MIL's estate and whilst we plan to enjoy some of it, we also will give our two children and grandchildren decent amounts to help them along. Hopefully we will not need paid-for care for a good few years, and can only hope if and when the time comes, this help to our family will not be seen as DOA. But none of us knows what the future holds and we can only do what seems reasonable and fair at the time. I believe it's our moral responsibility to pay for any care needs if we have the resources to do so, but equally think we all should be able to help our kids out if we choose. So the moral is "do the right thing" - which I believe in this case is find your parent the best care home you can. You might not not get as much inheritance ultimately , but at least you'll know that the money has been well spent.
And I agree with badmemory - less expensive care homes are not necessarily less good!

Keep_pedalling

Mickey666 said:

Interesting.  I wonder how long it will be before the taxman cottons on to this ‘deprivation of assets’ thing.  Why does it seem to be generally acceptable to avoid IHT by making various financial arrangements (ie basically giving away money and assets as PETs) but it’s generally frowned upon to make similar arrangements to avoid care home fees?   Perhaps councils should be limited to searching back only seven years for deliberately ‘deprived assets’, making it similar to the PET thing.

In practice gifts from that far back are totally untraceable so you would get away with it, but who in their right mind gives away their entire savings risking their long term security?

Doing silly things like giving your home away will always fall foul to both IHT avoidance and DOA as it is both a gift with reservation (so does not fall out of the estate after 7 years) and unlike bank accounts is held on public record.

Mojisola

nanapop1977 said:

My husband and I are in our 60s and quite comfortable in that we own our home, both have good pensions and have a bit in the bank. We are about to inherit a sizeable sum from MIL's estate and whilst we plan to enjoy some of it, we also will give our two children and grandchildren decent amounts to help them along. Hopefully we will not need paid-for care for a good few years, and can only hope if and when the time comes, this help to our family will not be seen as DOA.

If you do a deed of variation to MIL's estate and pass the money on directly to your children and grandchildren, it will never be yours and so can't be considered deprivation.

Keep_pedalling

Mojisola said:

nanapop1977 said:

My husband and I are in our 60s and quite comfortable in that we own our home, both have good pensions and have a bit in the bank. We are about to inherit a sizeable sum from MIL's estate and whilst we plan to enjoy some of it, we also will give our two children and grandchildren decent amounts to help them along. Hopefully we will not need paid-for care for a good few years, and can only hope if and when the time comes, this help to our family will not be seen as DOA.

If you do a deed of variation to MIL's estate and pass the money on directly to your children and grandchildren, it will never be yours and so can't be considered deprivation.

Actually it can, some people have tried and failed to this to avoid losing benefits or having to pay off debts.

What it does avoid is it entering your estate for IHT purposes.

Mojisola

Keep_pedalling said:

Mojisola said: If you do a deed of variation to MIL's estate and pass the money on directly to your children and grandchildren, it will never be yours and so can't be considered deprivation.

Actually it can, some people have tried and failed to this to avoid losing benefits or having to pay off debts.
What it does avoid is it entering your estate for IHT purposes.

You can't do it to keep claiming benefits or avoid debts because those are active at the time of the deed.