Depreciation of Assets and Inheritance tax Care Home advice

skinnydipper

Hi there,

after a little advice, please be kind...

My Parents now aged 75 are looking to sort wills and sort finances as they realise they're getting on a bit and want to put everything in order soonest.

they own their own property outright which they recently purchased for £400,000

They also have savings broken down as follows

£50,000 in premium bonds my mothers name

£70,000 in a joint savings bank account in both my mothers and fathers name

There is also £50,000 in premium bonds in my fathers name which is my sisters money but he is acting as guardian on due to poor mental health.

My father was recently diagnosed with early onset Alzheimers however is still very with it and it seems like a very slow progression.

They've worked very hard all their lives (as they constantly tell m)e and would like to gift as much as possible to their children namely myself and my sister, 

They're also worried that with high care home costs that should they need assistance, their life savings will be very quickly depleted.

I'm sure many people are in this situation and would like any suggestions of best practice to leave as much as possible to us the children.

I know many people will say seek advice of an accountant but asking here first

thanks

74jax

It's really hard. I was in very very similar circumstances, it pained dad to think he'd 'lose' his money.

I tried, pleaded, as much I could go make him realise they weren't 'losing' it, but in fact were in a very good position to chose their care, make sure they were cared together in the same place.

In the end he transferred me his money - he was dying and it calmed him to think he'd passed it on to me. In reality I then used that money to fund his and mams care.  Social services were fully aware and I just self funded the best care for them. 

Had dad not been dying, and had chance to look at care homes, care packages etc, i know 100% he would have understood, but he wasn't of sound mind and I so I did what I did to make his passing easier for him, but also me know I was doing the right thing.

Talk to them, explain they need it more than you.  Even if they gift it to you, social services will do the sums as though they still have it, so it doesn't really matter.

Every year mam and dad gave us all 3k, we had a history going back years and so social services allowed mam to continue doing that. Do you have anything similar?

Do you have PoA, are there wills?  How is property owned, Wills could pass a share to children - as long as they have capacity of course. 

Mojisola

skinnydipper said:

There is also £50,000 in premium bonds in my fathers name which is my sisters money but he is acting as guardian on due to poor mental health.

Is this documented somewhere?  If not, and care is needed, it will be counted as your father's money.

Also, if your parents have made POAs, get it done as soon as possible.

Mojisola

Second point above should read "haven't made POAs"

skinnydipper

Mojisola said:

Second point above should read "haven't made POAs"

can you clarify "POAs" for an idiot please..... I'm guessing power of attorney??

my mother wants to get some new wills written soonest and maybe this could be done by solicitor at same time

tacpot12

Your parents should look to put Powers of Attorney in place as a priority. 

You should check the law on intestacy - your parents may not even need a will if they are happy that everything goes to the children.

They need the advice of a solicitor who specialises in estate planning.  

They should ask for advice about your sister's money that they are holding on her behalf. They need to ensure that this money is not counted as theirs either by the local authority or HMRC. 

Savvy_Sue

tacpot12 said:

They should ask for advice about your sister's money that they are holding on her behalf. They need to ensure that this money is not counted as theirs either by the local authority or HMRC. 

And that if she is in receipt of means-tested benefits, that it is declared as HER money not theirs ... 

theoretica

tacpot12 said:

They should ask for advice about your sister's money that they are holding on her behalf. They need to ensure that this money is not counted as theirs either by the local authority or HMRC. 

And, if she benefits from someone holding her money for her if they want to put her portion of inheritance into a trust or make other formal arrangements for it.

p00hsticks

At their age, if one needs to go into care while the other is alive, the value of the marital home will be ignored.  However, one thing they can do to protect half the value of the home if the longest lived needs to go into care is to ensure that the house is owned as tenants in common rather than as joint tenants. This means that each will own half which they can bequeath as they wish, rather tahn it automatically passing to the other on the first death. They then need to make wills to leave their half of the property to their children rather than the surviving spouse, with a life interest to allow the surviving spouse to continue to live in the property for life if they wish.

Keep_pedalling

Forget IHT, they don’t have enough assets to worry about that, and forget about care costs giving money away will be treated as deliberate deprivation of assets

The two priorities are lasting powers of attorney, and sorting out those PBs held in your father’s name. This is obviously an ad hoc arrangement with no trust in place (PBS can’t be held by a trust) which is problematic as currently that money looks like his and will be treated as such is he ever needs care. The first you can do yourselves and I would suggest starting tomorrow, the second is more difficult and they really need professional advice on both getting that money out of your fathers name and how it is to be managed in future. A charity like Mencap might be a good starting point.

Malthusian

The obvious interim solution with regard to the Premium Bonds is for him to sell them and transfer the cash to his wife. (She is already maxed out on Premium Bonds so would have to use another deposit account, but that is a side issue.) All the disadvantages of holding the funds in his own name also apply to holding them in the mother's (i.e. they will be her money), but those disadvantages are less pressing if she has no immediate health issues.

This could of course be viewed as deprivation of capital, but only if it is already the case that the local authority would take the view that the funds belong to him and not his daughter.

If they want to get the money out of their own names but without giving the OP's sister automatic access to the capital they will need professional advice as others have recommended. And that will be one of the main topics of conversation when they sort their Wills out.