Future Inheritance/Capital Gains Taxes

JBTISH

theoretica said:

It was mentioned above, I think, the disadvantages of you or your sister owning property if you now or in the future claim means tested benefits.  Now you have mentioned that your sister is disabled, I think there is another avenue worth exploring - which is a disabled person trust.  If she qualifies, these can be set up so that the disabled person can benefit from an inheritance without their means tested benefits being affected.  This is not one to DIY, but needs a solicitor who understands them, and would need to be reviewed regularly as the rules do get changed.

Hi Theoretica

yes that would be useful. I find it very challenging to protect Mum and Sister from both the environment, themselves and others who may wish to take advantage. Future proofing against my death and ensuring that they would be looked after, their opinions respected and their entitlements given to them is something I think of a lot but setting such precautions up in a fool proof way for both now and the future is a real challenge. 

Jeremy535897

JBTISH said:

Jeremy535897 said:

She won't be eligible anyway because she must currently have savings well over the limit:
https://www.gov.uk/pension-credit/eligibility

Hi Jeremy535897

she currently has very little, less than £1000 or no savings depending on the time of the month or year. She will have at time of sale about £350K pre French and UK CGT which she will either have to live off and forfeit her PC, HB and CTB. Alternatively she will have to buy a home and account for future repairs and upkeep and then reapply for her PC only.

I am not sure of the facts, but if she becomes the owner of the property before it is sold, I think that is the point that pension credit would stop.

JBTISH

Jeremy535897 said:

JBTISH said:

Jeremy535897 said:

She won't be eligible anyway because she must currently have savings well over the limit:
https://www.gov.uk/pension-credit/eligibility

Hi Jeremy535897

she currently has very little, less than £1000 or no savings depending on the time of the month or year. She will have at time of sale about £350K pre French and UK CGT which she will either have to live off and forfeit her PC, HB and CTB. Alternatively she will have to buy a home and account for future repairs and upkeep and then reapply for her PC only.

I am not sure of the facts, but if she becomes the owner of the property before it is sold, I think that is the point that pension credit would stop.

Morning Jeremy535897

Could you clarify your last point please. “I am not sure of the facts, but if she becomes the owner of the property before it is sold, I think that is the point that pension credit would stop”. Could you clarify becoming the “owner of the property before it is sold” please. 

This is a very good point you make and I have asked an experienced Welfare Rights person about this and they advised that there is a 6 month ‘Grace Period’ from receipt of monies from a sale of a home to the purchase of a new home before Pension Credit stops (or requires notification to DWP). However I am of the opinion that this only applies if you are selling your primary residence and purchasing another primary residence. This would seem reasonable.  I don’t think it would apply if selling a second home (that you own a share in) to put the funds towards a primary residence as you currently have a home to live in. 

Jeremy535897

The point I was making is that a house you own that is not your residence is deemed to be an investment for pension credit, and investments and savings are deemed to produce an income of £1 a week for every £500 in value over £10,000, thus reducing or eliminating pension credit.

JBTISH

Thanks Jeremy535897. That’s understood. Have a lovely day.

Keep_pedalling

How long has she owned a share in this property in France? Even though she has been unable to benefit financially while her sister lives there it is still a notifiable event, and I think it will disqualify her from PC.

She also can’t expect to claim PC if she gives you a large chunk of the proceeds whether that is in cash of in the form of a share in the house, that would be classed as deliberate deprivation of assets and would disqualify her from means tested benefits. Even if she did not gift you a share of the house, buying something larger than she needs for herself alone is going to make reclaiming PC difficult.

Perhaps the simplest thing would be to forget gifting, buy the house you move in with her as planed and you pay her for  board and expenses, which would more than offset her loss of PC.

Having said that this is probable not the best board to get answers about benefits, the experts on that can be found over on the benefits board.

Edit - I see you already found the Benefits board.

NorthYorkie

I have been trying with great difficulty to follow this thread. The OP has been drip-feeding information by introducing new facts over time. What does seem clear is that 1) there is no IHT needing to be avoided, 2) there seems to have been a false claim to Pension Credit, 3) there is a potential French tax issue and 4) there is something around £350,000 in the mother's estate. It is therefore worth paying for professional advice, particularly in respect of (3).
I don't think anyone should spend more time on this.

JBTISH

Good morning Keep_Pedalling

She has owned a third share in the property in France since her parents died in 2005.  She has never lived in the property as she is tied to the UK health system and so could not move abroad. Since 2005 the DWP has been informed that she owns a one third share in a property abroad. As she cannot force her siblings to sell (not that she would want to) and as the legal precedence is in France the DWP have noted on their records the declaration and it has not affected her Pension Credit to date. 

In relation to ‘Deprivation of Income’ I am acutely aware of and very cautious of this point. As I stated before, for me this is not about evading a tax or getting more than an individual is entitled to. It is about ensuring that the same individual is not unfairly penalised or left without things they are entitled to. It is also about ensuring that decisions made today do not have consequences for the person I am caring for in the future or should something happen to me. I have to plan as if I would not be around tomorrow. 

* No need to read beyond this point unless interested in back ground information *

I am in an odd position in that I hold little or no legal power but all the responsibility. The decisions I make have direct consequence on the persons I care for and even though I make the decisions, they will pay the price should I make a mistake or overlook something that seems trivial.  There have been times when had I just listened to the seasoned professional, I would have been lulled into a false sense of security and the consequences terrible. Sometimes even when the best intent and with the best kindness a person offers advice or help it can be from a misunderstood view point or experience. I am also cautious as it can be, though not often, stressful for me having to argue a point with a Government Department when I know I have my facts and ducks in a row and proof to back it up. But it would be a nightmare for a person who has a mental health disability and more often than not they would give up or not even start. 

With this in mind I triple check information, random ideas and suggestions. A lot of the time the obvious course is the road to follow but sometimes a completely random idea or suggestion hits the mark spot on.  At the moment I am airing on the side of her just buying a home and changing her will to leave it to her disabled daughter so her daughter is protected and covered in some way when she passes away.

I am aware of systems and government help schemes and power of attorney documents but sometimes you have the tool but not the requirement. Other times, you have the requirement, are desperate and have not a single tool. Also with power of attorney, the consequence can still fall on the person you are caring for and even when all the evidence points to someone else having made the decision, the law can and will penalise the innocent. 

Keep_pedalling

Once the house is sold then she will no longer be able to claim PC, which is where DOA kicks in. I can’t see any advantages for her in making any sort of gift. 

You are concerned about what happens if anything happens to you, so consider what happens if you own jointly and you have an accident or serious stroke that leaves you permanently mentally incapacitated. This would leave her stuck in an house that she can’t sell to move into more suitable accommodation, whether that is sheltered housing, assisted living or residential care.

Has she made LPAs for finances and welfare? If not that, along with making a will, should be a priority.