Widowed Mother, only Child (adult) , modest estate , forward planning, joint account ?

david_now

Hi,
My elderly mother has been diagnosed with a terminal illness and we are looking to prepare ahead of the event. We've been advised that life expectancy is measured in months rather than years.

I am the only child, and there is currently no will. We are very close.

My mam has liquid assets (savings, premium bonds, small endowment that could be cashed in) totalling 5 figures.
She has no investments or property. She has a prepaid funeral in place.

The legacy will be a significant but not life changing amount to me.

She wants everything to pass to me. There is no prospect of inheritence tax being due. We're not looking to reduce tax but looking to reduce paperwork, and delays as much as possible

We have considered selling the premium bonds, cashing in the endowment and consolidating all the funds in a single account as a joint account.

Clearly, all funds going in tto the account are from her but we were hoping that on death they simply become mine, without the need for probate etc.

Does this sound a sensible plan , and are there any potential pitfalls we should be aware of ?

Thanks

david_now

I should have added  that my mam has no income other than state pension.

Mojisola

Definitely cash in the premium bonds otherwise you'll have to get probate on the estate.

The joint account plan sounds wise - it means that you will be able to pay things out of it if your mother becomes incapable - as long as it doesn't affect your financial situation (such as means tested benefits).  If she needs residential care, the full amount in the account should be declared as hers for the financial assessment.

Re benefits - does your mother already get Attendance Allowance?  If not, it can be applied for through the special regulations - www.gov.uk/attendance-allowance/eligibility

McKneff

Why not leave the endowment policy until afterwards, this is when they are supposed to pay out, they are an insurance policy made to be paid out after the policy holder is deceased. 

david_now

Thanks fo the reply.

I am a higher rate tax payer and not in receipt of any benefits, so the joint account shouldn't effect me. I understand it would not count as income or gain either. Plase correct me if I'm wrong.

The point regarding potential residential care is noted and understood.

My mother has received no benefits of any kind to date, but the nurse we saw at her diagnosis last week indicated that she is entitled to the allowance and will initiate an application for it.

david_now

McKneff said:

Why not leave the endowment policy until afterwards, this is when they are supposed to pay out, they are an insurance policy made to be paid out after the policy holder is deceased. 

Apologies , it isnt an endowment , it is a 'with profits bond'

I don't think I'm alone in not fully understanding how 'with profits' work  , but I think it can be cashed in at any time and pays 101% on death. 

if it avoids having to get probate it would make sense to cash in now.

The policy is with Standard Life. Does anyone know the threshold they apply for requiring probate ?

SiliconChip

Part of the answer is for your mother to make a Will leaving everything to you. If the PBs are more than £5K then cashing them in might be wise, blow that figure they don't require probate to release the money.

Keep_pedalling

Be careful with the bond, cashing it in may result a lower payout than on death, and may also have tax complications.

thegreenone

My late Mum had a with profits bond with L&G/Reassure.  They sent me a Chargeable Event Certificate months after they paid out, which means I have to declare the £14k I received on my next Tax Return.

Personally, I would recommend your Mum to cash it and the PBs now and get absolutely everything in to one joint pot. If there's no property involved and everything shut down, no probate should be needed.  I would recommend Mum makes a Will.  

When you go to her bank to make her account a joint one, make sure the staff talk to her alone (and make notes) so she can explain why she is doing what's she is doing and there's no pressure from you.