Care Fees Annuity - Advisers Commission?

NottinghamKnight

in_my_wellies said:

If I was working my mother would have to go into a care home but she sold up and came to live with me. Her IFA told us she could only pay me the cost of food and extra heating which she does. She will have to pay IHT. Mum and my brother wanted her to pay me a more realistic amount, considering how much she is saving by not being in a care home. But the IFA says this would be seen as me spending money which is not in her interest and depriving her of assets which she might need for the care home in the future. Even two years in a home at say £100,000 will still mean she pays IHT. 

The IFA isn't correct, though you would have to approach this with care. The money she pays would have to be determined to be reasonable but that doesn't mean just food and a bit of heating, it could be any element, part of the rent/ mortgage, council tax, and many things she might want or need, maybe carer visits, cleaner etc.  You also need to ensure you don't conflate deprivation of assets for care costs with IHT liability, given that your mother's net worth appears to be well in excess of half a million then deprivation of assets won't be an issue if she is paying for care fro he own means.

in_my_wellies

NottinghamKnight said:

The IFA isn't correct, though you would have to approach this with care. The money she pays would have to be determined to be reasonable but that doesn't mean just food and a bit of heating, it could be any element, part of the rent/ mortgage, council tax, and many things she might want or need, maybe carer visits, cleaner etc.  You also need to ensure you don't conflate deprivation of assets for care costs with IHT liability, given that your mother's net worth appears to be well in excess of half a million then deprivation of assets won't be an issue if she is paying for care fro he own means.

I think what she pays towards 'keep' is fair. She pays for every other tank of petrol which covers visits to appointments, trip, etc

My understanding is that she can use money in her current account (state pension, small private pension and AA) for day to day normal spending and birthday/Christmas gifts, etc, but if she wants to make a large purchase from her investments this will be problematic re IHT and because I have PoA. 

For example, she will need access to a walk in bath or a shower. I'm happy with what I have and would only change it for mum but the IFA has told me that as this will increase the value of my property. On her death it will be assessed and extra value will be included in her estate for IHT purposes. Likewise if she wants a new car. I don't, I have always driven old cars but she always bought new every three years so I would only be changing for her. We use her car now and she's getting itchy for a new one. I have read this could be counted as 'normal expenditure' for her as I have proof of her last three new car purchases. 

Such a minefield. 

Sorry to jump on this thread

Linton

NottinghamKnight said:

in_my_wellies said:

If I was working my mother would have to go into a care home but she sold up and came to live with me. Her IFA told us she could only pay me the cost of food and extra heating which she does. She will have to pay IHT. Mum and my brother wanted her to pay me a more realistic amount, considering how much she is saving by not being in a care home. But the IFA says this would be seen as me spending money which is not in her interest and depriving her of assets which she might need for the care home in the future. Even two years in a home at say £100,000 will still mean she pays IHT. 

The IFA isn't correct, though you would have to approach this with care. The money she pays would have to be determined to be reasonable but that doesn't mean just food and a bit of heating, it could be any element, part of the rent/ mortgage, council tax, and many things she might want or need, maybe carer visits, cleaner etc.  You also need to ensure you don't conflate deprivation of assets for care costs with IHT liability, given that your mother's net worth appears to be well in excess of half a million then deprivation of assets won't be an issue if she is paying for care fro he own means.

Yes I think an appropriate share of costs of things mother gets benefit from should be OK.  Where it may get difficult would be payment for the OP's time.

in_my_wellies

Linton said:

Yes I think an appropriate share of costs of things mother gets benefit from should be OK.  Where it may get difficult would be payment for the OP's time.

  I don't get paid/charge anything for my time. She pays me £50 to cover food and extra heating and water. I have kept the increased bills. Mum loves to wash up every cup with a new bowl of hot water!!! 

badmemory

in_my_wellies said:

For example, she will need access to a walk in bath or a shower. I'm happy with what I have and would only change it for mum but the IFA has told me that as this will increase the value of my property. On her death it will be assessed and extra value will be included in her estate for IHT purposes.

I am going to consider this as a serious point.  If you have this fitted for her benefit then what change do you think there will be to the value of the property after say a year?  If you have a stairlift fitted what difference do you think that will make?  I would say about none!  If you have an extension built, now that would be a different story.

Of course, you could have a hoist fitted to the bath as my mother did but that would make it difficult for you to use.

Malthusian

in_my_wellies said:

For example, she will need access to a walk in bath or a shower. I'm happy with what I have and would only change it for mum but the IFA has told me that as this will increase the value of my property. On her death it will be assessed and extra value will be included in her estate for IHT purposes. Likewise if she wants a new car.

Your IFA sounds cautious to the point of being a fruitloop. An increase to the value of your property from buying a walk-in bath? Whoever eventually buys your house will probably have to pay to rip it out again. And why does it matter? If she needs a walk-in bath she needs a walk-in bath, and the fact that it might get added back onto her estate as a gift to you (dubious) hardly matters. If she did nothing, her IHT bill would remain exactly the same (as the cash not used to buy a walk in bath would still be in her estate) and she wouldn't be able to wash herself safely.

Whether her spending her own money is in her interests is only relevant if you were making decisions for her under a Power of Attorney or deputyship, and from your posts it sounds as if she still has capacity and makes her own decisions.

If she's over the IHT threshold then the prospect of her care costs falling on the LA is surely remote, so deprivation of assets is irrelevant.

badmemory

Malthusian said:

Your IFA sounds cautious to the point of being a fruitloop.

I'm so glad you said that as it was what I was thinking but don't really know enough to know, if you see what I mean.  I wonder if the IFA would have similar objections to buying say a chair that rose to help the person to stand without having to be hauled up.  Anything which enables a person to not be dependent for longer must be seen as a good thing.

in_my_wellies

badmemory said:

I am going to consider this as a serious point.  If you have this fitted for her benefit then what change do you think there will be to the value of the property after say a year?  If you have a stairlift fitted what difference do you think that will make?  I would say about none!  If you have an extension built, now that would be a different story.

Of course, you could have a hoist fitted to the bath as my mother did but that would make it difficult for you to use.

I assure you it is a serious point, the IFA really worried me. I agree that any change to the bathroom would not add hugely to the value of my home. The devil in me says I'll keep the old bath in the shed and reinstall it but that is not a serious point.  

Malthusian said:

Your IFA sounds cautious to the point of being a fruitloop. An increase to the value of your property from buying a walk-in bath? Whoever eventually buys your house will probably have to pay to rip it out again. And why does it matter? If she needs a walk-in bath she needs a walk-in bath, and the fact that it might get added back onto her estate as a gift to you (dubious) hardly matters. If she did nothing, her IHT bill would remain exactly the same (as the cash not used to buy a walk in bath would still be in her estate) and she wouldn't be able to wash herself safely.

Whether her spending her own money is in her interests is only relevant if you were making decisions for her under a Power of Attorney or deputyship, and from your posts it sounds as if she still has capacity and makes her own decisions.

If she's over the IHT threshold then the prospect of her care costs falling on the LA is surely remote, so deprivation of assets is irrelevant.

I agree the IFA does come across as super cautious. Unfortunately the long standing IFA died suddenly and this one is new (2  years), she often has to go back to the office to answer my questions.

You make good points about the bathroom being ripped out and the IHT remaining the same. She said as I have PoA and wanted to spend money I needed to go through the Court of Protection as there was a clash. So I wondered what was the point of the PoA? I wasn't convinced so I rang the OPG who are very helpful. They said the doctor could assess mum's capacity. The doctor spoke to mum on the phone and has it on record that she has capacity. For now. 

badmemory said:

I'm so glad you said that as it was what I was thinking but don't really know enough to know, if you see what I mean.  I wonder if the IFA would have similar objections to buying say a chair that rose to help the person to stand without having to be hauled up.  Anything which enables a person to not be dependent for longer must be seen as a good thing.

You are a mind reader! I asked about an rising electric chair too. She said it could be bought out of her day to day pension money. 

Thank you everyone for your helpful comments. It does give me confidence to ask the IFA more questions and to just go ahead with buying things.  

NottinghamKnight

An MSE response might be to sack the IFA, how much is he charging for misleading advice?

LHW99

if the IFA is having to ask a more senior person - perhaps it would be worth asking to speak directly to that person?