Gifting money to family

MrChris1979

Hi I’m just looking for a bit of advice on gifting money to family members. My father has recently received a bad health diagnosis and has some money in different savings he wants to give to family members. He is wanting to do this so that his wife will not be left with a big estate (less than £350,000) which may be used to pay for her care if it’s needed in later life.
could anyone kindly give us some advice on the best way to gift his savings to family members other than his wife tax free. Sorry if this is an obvious question or has been asked before. Thank you.

McKneff

Of course its not allowed. 
Look up 'deprivation of assets.'

eskbanker

He can give his money away without taxation at this point, but it'll still be regarded as part of his estate for inheritance tax purposes if he passes away within seven years.

Not sure exactly what your point is about care costs but hopefully you're not suggesting some sort of attempt to evade liability for these, as the local authority will be more than capable of spotting this when considering any future funding claim....

Sea_Shell

Actually can it be deprivation of assets if one spouse gives away their money, to avoid it being passed to their spouse and eventually used for the spouses care costs?

The surviving spouse has not given anything away!!

jimjames

If you had a choice of getting the care you need and want or the care that the council is prepared to fund, which would you want? Having the funds gives you that option.

kuratowski

I would suggest that he leaves it to the chosen family members in his will, instead of gifting it.  That way, it is still available to him in his lifetime, if he needs it.

Probably too late to avoid IHT anyway, if he has received a bad health diagnosis.

pbartlett

You can give away as much as you want to any one you want without any tax liability.

There are just 2 points to consider.

1st of all inheritance tax will be payable if you survive less than 7 years and you die with more than the iht allowance

2nd should you wish to claim means tested benefits (for example a care home) then your gifts may be treated as deliberate deprivation of assets. This only applies if you claim means tested benefits - if eg you pay for a care home yourself it doesn't apply.

Keep_pedalling

It would be an exceedingly dumb thing to do. If his wife ever need care then surely she would be better off with more assets to be able to afford the best available. His wife should be the priority not potential beneficiaries of her estate who have done BA to earn the windfall.

Brie

I thought that anyone would be allowed to give suitable gifts of money to family members under certain conditions and it not be considered deprivation of assets.  I've got a vague idea that it is £3k per year per individual although other additional amounts might be allowed for particular reasons like weddings etc. 

But if he intends to leave something just under £350k for his wife and presumably a house they live in (plus furnishings) then she will have too much to be eligible for any free council support for some time.  

Sorry MrChris1979 for you being in a difficult family situation.  I hope you find a way to resolve things and everyone get through it all peacefully.

Keep_pedalling

Brie said:

I thought that anyone would be allowed to give suitable gifts of money to family members under certain conditions and it not be considered deprivation of assets.  I've got a vague idea that it is £3k per year per individual although other additional amounts might be allowed for particular reasons like weddings etc. 

But if he intends to leave something just under £350k for his wife and presumably a house they live in (plus furnishings) then she will have too much to be eligible for any free council support for some time.  

Sorry MrChris1979 for you being in a difficult family situation.  I hope you find a way to resolve things and everyone get through it all peacefully.

The £3k is an IHT allowance and nothing to do with DOA. The OP has not stated what assets his mother would be left with after all this gifting, but if it left her with a house and little or no cash then she would not be a a very comfortable financial position to live out her latter years.

His father could always leave his half of the house to his children giving his wife a lifetime interest in his share, which would protect his legacy from care cost or from the complications that could occur if she later remarried.

enthusiasticsaver

He can gift money to whoever he wishes but if he dies within 7 years it will still be considered to be within the estate and some IHT may be due depending on when he dies and how close to the 7 year limit.  There is a taper relief which reduces as the 7 year limit gets nearer.  It is called a Potentially Exempt Transfer. 

I don't think the deprivation of assets would apply here as he presumably would not be applying for care costs but if he does then certainly gifting significant amounts away to avoid having to pay care costs would not be advisable.  He needs to think carefully  as to how this will affect his spouse going forward and indeed his own situation if he is ill and needs care himself.