Inheritance Tax / widower in Care

weddingringman

I have a friend that’s growing concerned with the way her grandparents estate is being handled.

Both grandparents were taken into care in recent years with one sadly dying. The bank accounts were signed over to the mother and her two sisters. The house was sold for approximately £500,000 and the money split into my friends mum and her sisters personal accounts. My friends mum isn’t touching the money in case the day comes where she may need it for additional care costs for the surviving grandparent. 

1) The grandparent that passed away has a pension that covers the grans  care costs, so can my friends mum enjoy that money without concern of ever having to contribute to care costs?

2) None of the siblings that inherited the house seem to of paid inheritance tax on the house yet as the granny is still alive. Is this normal?

3) The parents all have access to the grans account who remains in care but the cash was mounting up as the pension is a lot more than the care cost. Recently my friend learned one of the aunties withdrew £15,000 and gave it great grandchildren without consulting her mum. As she doesn’t have kids herself, she was furious that money of this size was just being withdrawn and distributed. Without any formal process or agreement.

Surely this is all subject to inheritance tax? You’d think extensive accounts/records should be kept in these circumstances? 

Isnt all of this money that continues to come in until the surviving grandparent passes away, all subject to inheritance tax?

[Deleted User]

While the inheritance tax may be a major issue, the most urgent point is the withdrawal of the monies without consent. A solicitor should be appointed immediately. 

The beneficiaries of an estate generally do not pay inheritance tax - the estate does. There may be no inheritance tax issue at all on the estate of the grandparent if he left everything to his wife in a will. (Was there a will?) There almost certainly will be on the passing of his wife. 

As I said- legal advice required.

weddingringman

He will of left everything to the wife who is now in care. But upon selling the house, would any relevant inheritance tax of been taken at that point with the Gran still being alive? Or is such tax only paid once it is technically ‘inherited’ when the gran passes away? Should the from the sale of the house shave stayed with the granny? 

More generally is it fair to say that whilst looking after someone’s accounts when they don’t have the mental capacity to do that themselves, you can’t withdraw money and spend it as you see fit?

My friends parent doesn’t want to involve a solicitor in case it causes a massive family feud. She asked that the money was put back into the grans account.

Is it potentially illegal to of taken this money without notifying anyone it was being gifted? I wonder if they checked that they could legally gift that amount of money each calendar year. 

I suppose either way my friend is annoyed that the money is being dished out unevenly. 

weddingringman

I read a bit about gifts and power of attorney so I suppose my final question is this…

When the granny passes away, who actually verifies how much money has been gifted as a means of establishing whether the estate should’ve been subject to inheritance tax? It seems as though the power of attorney could just abuse that position, withdrawn money regularly for many years, then wrap the estate up when the granny passes away once her wealth has diminished.

Only one of the sisters is power of attorney so the others could be swindled. 

Also, I read that the 325k is the threshold for inheritance tax. There are 3 siblings, so is this effectively 975k? Ie. It seems no inheritance tax is ever likely to be due.

If the grandads pension covers the grans care. It would seem the sisters could spend the money from the sale of the house with little concern of it ever being subject to tax or recalled for her care. 

Jeremy535897

Inheritance tax is based on the donor. The number of siblings is irrelevant. As a married couple (presumably grandfather left his estate to grandmother), the grandparents potentially have a nil rate band of £650,000, and there may also be a residential nil rate band available. There may also have been lifetime gifts.

There appears to be a power of attorney in place. Who holddsit and has it been registered?

Keep_pedalling

The money from his estate should not be anywhere near their personal accounts it should be held in trust for his wife. Are you sure his pension is covering her care costs? It would need to be in the region of £4000 a month to do that.

Considering how badly they have handled the estate assets I would be worried that they are equally badly dealing with care fees.

weddingringman

There is a good chance the pension is that figure as he had a very senior public sector role. 

As the granny is still alive - is it a legal requirement that the sale of the house is placed in a trust? Are they breaking the law by having the money split and placed in their own accounts?

I suppose I would of assumed that someone of legal standing such as a solicitor would have to be involved in these situations. It just seems as though the granny has been taken into care and they’ve commandeered her finances.

Even if they legally sought control of her affairs as she has bad dementia, you’d think there would have to be accountability on every single transaction made. 

Is this common albeit unethical? It seems as though the power of attorney can legally just gift money regularly and abusing that position seems hard to prove given some high court rules I’ve read. 

 

Jeremy535897

Everything you know is from hearsay. It's impossible to make judgments without seeing all the documentation involved, and understanding its legal implications. You are getting your facts second hand from someone who presumably has no legal qualification. She did not object to receiving what appears to have been at least one third of £500,000, although I appreciate that she says she is keeping it to one side (although if the pension genuinely far exceeds grandmother's needs, this may be unnecessary). She must have received some information from a solicitor when receiving this sum. What was said then? Also, who holds a power of attorney, what sort of power of attorney is it, and has it been registered?