deprivation of assets

john6812

hi i am looking for advice on a matter. my sister and brother in-law lent my mum  £20,000 to buy her council  house approx 15 years ago. to receive the discount from the council for the years of living there the house could only be put in my mums name but the rest of the family ie myself and brother, sister all new and agreed that if mum died while still in this house my sister b/in law would inherit the house and if the need for care arose they would get there money back only.my mum has now been in assisted living for a year and we have just sold her house and proceeds are in mums bank account. the problem we are having is how to give my sister and brother inlaw there £20,000 back without it being classed as deprivation of assets should mum ever run out of money. She is 89 years old and in a housing 21 and at the current rate of rent and care has enough for 10 years. We have seen article about gifting up to £3000 a year so could my mum do this each year to pay of this dept. or will they now have to wait till mum is no longer with us to receive this money back. This is assuming mum does not live till the money from the house sale  runs out first

[Deleted User]

Since the money was a loan I don't see an issue calling in the loan. I take it the transaction was documented at the time.

Brie

Even bank statements showing money from one account to another should suffice.

Alice_Holt

Was there a written formal agreement of the £20k loan ?

What benefits does your mum claim?
If Pension Credit are they aware of the amount in your mothers bank account?

Is your sister  in receipt of benefits ?

The £3k gift exemption relates to Inheritance not deprivation of capital.

Are you worried about deprivation of capital in relation to:
i) benefits;
ii) paying for care needs.

It would be helpful if you could re-read, amend and clarify your OP.

calcotti

Crucial issue is going to be documentation of the original loan. If not documented there is no evidence that it was not a gift.

Robbie64

At the very least, assuming no proof now exists that £20,000 was lent by your sister and B-I-L to your mum, get your mum and your sister / B-I-L to all sign something as soon as possible acknowledging payment / receipt of £20,000 as a repayment of a loan made on (try and pinpoint the date) to purchase her house. I would suggest your mum pays the £20,000 back now and keeps a copy of whatever all three sign, as well as your sister and B-I-L also keeping a copy.

If your mum still has sufficient funds left to self support her housing / care support for a number of years I can't see a problem. The worst thing would be to pay the money back over a number of years. Best to do it now, and in one lump sum payment.

john6812

hi thank you for all the reply's, the loan was not documented at the time and this is why we are not sure it would be ok for mum to pay it back. mum is now not receiving any benefits since the sale of her house and is self funding her care package ect in assisted living. If she was to pay my sister back in one lump sum we have worked out she can continue to pay her care, rent ect for at least 7-8 years before the rest of her money falls to approx 23,000 at which point she would be 97 years old and need the council to help pay her care. The thing that concerns us is they say paying the loan back was not allowed and she has caused deprivation of assets to herself and will not help her with care. This seems to be a mine field finding out if this may happen as all online info seems to say it depends on the council at the time.as i said she would pay the money to sister then self fund her care for as long as she can approx 8 years so we are not trying to lower her money just pay this one loan back

calcotti

Apologies if what follows is rather blunt. Depending on her health conditions, if she can afford to pay for care for 7 to 8 years even after paying back the money and her life expectancy is less than that it seems to me that it would be hard for the council to argue the money was given away so as to entitle herself to help with care in the future.

TELLIT01

Sadly 'being hard to argue' doesn't necessarily stop councils from trying.  A friend's mother had to move into a care home but her property had been held in a trust for decades.  Despite solicitors for the trust providing proof to the council of this, the council fought for over 2 years to get full control.  They actually changed all the locks to prevent the daughter accessing the property, but denied liability when there was a break in.  The council finally lost in court and ended up paying all costs.

calcotti

I did say 'hard to' argue rather than 'couldn't' argue!

john6812

the difference tellito1 is my mums house is sold and the cash is in her account. up until the sale went through she received a lot of help in benefits but most of it stopped and she is now paying approx £2000 a month from her own money for rent and care and will do till her funds fall below the qualifying amount for help again in approx 8 years