How to Protect Parents Assets and avoid 'Deprivation of Assets'?

JakeHyde

Hi everyone,

I’ve been putting off this post for a few months, 

My dear mum passed away before Christmas, it’s left me devastated, and I’ve been finding it hard to deal with the Will, and other only child / executor / family duties.

Over the next few weeks, I’ll be asking a few questions on here, especially about ugly topic of probate! 

My mind is so cloudy with everything going on, so I am struggling to write this in a clear and concise manner, so please bear with me. Also I didn't know where to post this question, so I hope here is okay.

QUESTION: 

My dad has a significant amount of savings of his own. Right now they are sitting in a bank earning nothing, so I am looking at high interest accounts, and an ISA to at least provide a little 'protection' from inflation.

We are both worried that if later in life (he's 78), if he becomes ill, and the government takes his life savings, and the family home. Is there any way to protect his savings, by either putting it in some kind of trust, assigning me as Power of Attorney, or him gifting the money to me, but somehow he retains some kind of access to it? He doesn't mind allowing me to take care of the family money, he trusts me infinitely , he just doesn't want to feel totally powerless, and rightly so.

Before anyone asks, we have an extremely close relationship, all we have are each other, I’m not trying to take his money, I have money of my own, I just want to intelligently and legally insulate it from the government absorbing it, if he should require care down the line. He hopes to keep his own independence, and I want him to live near me so I can look after him, or pay for care when the time comes.

He is healthy at the moment, but we don’t want him to be accused of intentionally depriving himself of assets.

Do you know what sort of time frame we have to take positive action? I know inheritance tax is 7 years, but is that the same in this situation?  Time is running out for me to help him with an ISA this year.  A fixed term ISA might be the wrong choice, if we later realise we need to reallocate the assets.  So maybe an easy access might be the smarter thing to do in the interim. 

Any and all advice welcome, thank you.

_Penny_Dreadful

JakeHyde said:

Hi everyone,

I’ve been putting off this post for a few months, 

My dear mum passed away before Christmas, it’s left me devastated, and I’ve been finding it hard to deal with the Will, and other only child / executor / family duties.

Over the next few weeks, I’ll be asking a few questions on here, especially about ugly topic of probate! 

My mind is so cloudy with everything going on, so I am struggling to write this in a clear and concise manner, so please bear with me. Also I didn't know where to post this question, so I hope here is okay.

QUESTION: 

My dad has a significant amount of savings of his own. Right now they are sitting in a bank earning nothing, so I am looking at high interest accounts, and an ISA to at least provide a little 'protection' from inflation.

We are both worried that if later in life (he's 78), if he becomes ill, and the government takes his life savings, and the family home. Is there any way to protect his savings, by either putting it in some kind of trust, assigning me as Power of Attorney, or him gifting the money to me, but somehow he retains some kind of access to it? He doesn't mind allowing me to take care of the family money, he trusts me infinitely , he just doesn't want to feel totally powerless, and rightly so.

Before anyone asks, we have an extremely close relationship, all we have are each other, I’m not trying to take his money, I have money of my own, I just want to intelligently and legally insulate it from the government absorbing it, if he should require care down the line. He hopes to keep his own independence, and I want him to live near me so I can look after him, or pay for care when the time comes.

He is healthy at the moment, but we don’t want him to be accused of intentionally depriving himself of assets.

Do you know what sort of time frame we have to take positive action? I know inheritance tax is 7 years, but is that the same in this situation?  Time is running out for me to help him with an ISA this year.  A fixed term ISA might be the wrong choice, if we later realise we need to reallocate the assets.  So maybe an easy access might be the smarter thing to do in the interim. 

Any and all advice welcome, thank you.

Who do you and your father think should pay for his care, if he needs it, later in life? The government doesn’t absorb the money, it is used to pay for residential care. 

I have no idea if your father is anywhere near the IHT threshold. His threshold is probably £1 million and if his assets are likely to exceed that at his time of passing he should seek professional estate planning advice rather than you attempting to DIY it. 

p00hsticks

I'm sorry for your loss - it must be a very difficult time for you. 
But I think you need to take a step back, perhaps in a while when things aren't so raw, and consider what you are actually asking.

Many people don't require residential care in later life. 
You hope that you will be able to care for your father if he needs it, and maybe you will. 

But if it comes to a point where he does need more care than you can realistically provide at some point in the future, wouldn't you both want that to be the best care available ? Where he gets to choose what care package he has and where he goes, ideally close to you ?

That will be achieved by him having the resources to be able to pay for his own care, either in his own home or in a residential home, rather than him being at the mercy of whatever the Local Authority decides they can afford to offer him. 

Daniel54

Assuming your father has mental competence,then  you need together to put in place as a priority a lasting power of attorney.At a raw time , this is a constructive focus for your attention ,although it has no relevance to your question but can be really important further down the line if or when he is in need of your assistance.

As an attorney you will be bound only to act in the best interests of your father.This cannot include  safeguarding any inheritances he might wish to leave.

Keep_pedalling

Sorry to be so blunt but what you are actually asking is how can I protect my inheritance at the expense of my father’s long term security.

The government don’t take your house and your saving, one of two things will happen if you need long term care and you have significant assets. You will be financially assessed by the LA who will decide how much you have to contribute for the care that they arrange or (and this will be my choice) the LA are not involved and you or your family will arrange care privately either in a care home of your choice or with live in carers.

For those with no assets you don’t get that choice, you will be dependant on getting past the LAs funding panel so you won’t get the care you need until your health is pretty decrepit and you then run the risk of ending up in ‘Over my dead body Grange’ because of the lack of options.

There are no sensible alternative reasons to gift all your assets away or put them in trust so any attempt to do this will be deliberate deprivation of assets. If his net worth is over £1M then it might be worth doing some IHT planning but if he has that much in assets there would be plenty left after care costs unless he was one of the very rear cases that spent many years in care.

I agree with the comment above, he needs to prioritise putting a financial LPA in place. You need this if you are going to help manage his finances, and it will be absolutely necessary if he ever loses the mental capacity  to manage his own affairs.  

RAS

Your dad will have an IHT allowance somewhere between £650k and £1m. 

If his assets are at that level he can afford several years in a good care home and still leave a decent inheritance,

He needs to put in place LPAs for health and finances as a priority. I'm sure you'd rather he was in a good home near you that a poor one near where he lives, which could happen if you leave it to social services.

When things are less raw for you both, you may want to discuss whether he would like to move closer to you rather than stay in the family home?

Meantime, he's unlikely to get an ISA appointment this financial year, but there'll be plenty the week after, and he'll get more benefit from the year long interest. Don't tie money up for over a year at this stage, as he needs flexibility.

If your dad is anything like my parent, you can also help be researching things like insurance and save them a decent amount off current prices.

Spendless

Buying a funeral plan upfront is not classed as DOA (or never used to be, double check). That was advice given to my Mum when my Nan entered a care home and Mum got POA. Be careful of what you purchase because I believe some policies became invalid as they weren't regulated.

My Nan was in a care home due to dementia  for 8 years, 90 when she went in, nearly 99 when she died.. I know people say most don't enter a nursing home or are there an average of 12 months.  To me you need to hear from people who have had relatives in homes for  longer.

Nan's property was sold to pay for her care and my Mum was able to choose a home for Nan that was nicer than some she looked at and got more of a choice.

When Nan died earlier this year, the money she had left from her property was in-between £14, 250--£23,250 which meant she contributed to but didn't pay all of her fees.

Having the funeral plan meant that the costs were mostly taken care of without going further into her estate to pay for it. The bill over and above the plan has come to under £500, which included a wake (small gathering though this wasn't due to financial reasons). Funeral plans you pay at tomorrow's costs, so when purchased 8 years ago the amount paid was more in line with what a funeral costs today. If Nan had died sooner then the cost of the plan would have been more than just paying it at the time, but that is the gamble you take. For our family it worked out because Nan has been able to leave her beneficiaries more money than she would have done without it.

Nan also left a little more money because she already had 3 insurance plans that paid out after her death. She had cancelled 1 after paying 2 years premiums ironically the one that was 'with profits' for reasons we'll never know, so only paid out just over £100, the other paid out a set sum - Nan had probably paid more in premiums for this! The 3rd was a penny policy taken out by my G-Gran 99 years ago to pay out £10. That was looked into expecting nothing and paid out over £500. None of these were still being paid for at the point my Mum became POA. These payouts from insurance companies were able to cover what I called Nan's final bills, such as copies of her death certificates to send to various institutions, the funeral costs over and above the plan, her final care home bill.

So though you can do nothing to stop any care home bills if needed  and nor should you because you would want your Dad to be in the best and most suitable place for him, it's not always possible to give care at home,  it is possible that you don't have to get down to the current £14k(ish)  and then take the funeral costs from that. I believe there's also a possibility that in future the amount may go up from the current £14, 250 before you need to pay all costs, but my parents said recently that that idea had been put back. Haven't looked at any news stories so I can't say.

BooJewels

I'm sorry for your loss.

I too don't understand your idea that the Government will absorb his savings and family home.  If your father has 'substantial savings' then he's very lucky in that he's in a good position to be able to afford his own care at a place of his choosing - should he need it, which as pointed out, many actually don't.  My aunt who recently passed, lived totally independently to 95 - she only gave up driving her sports car at 93 when she smashed her hip.  My mother-in-law was driving and living independently until 3 weeks before she died at 92 in January.

Both of my parents were in a care home at the end - the same one, at different times - and it was really lovely - a privately run old country house in its own grounds.  My Dad had a lovely en suite room looking over a large lawn and woodland and had deer grazing outside his window, his own bird feeders on the window and piles of his own books, a music player, TV etc.  The staff were fabulous and are still the same ones there after several years.  They both paid privately and whilst it means that I personally inherited much less from their estates, I truly do not care, as the care (and my peace of mind) they had at the end of their lives was absolutely priceless.  The Government didn't feature in any of it - other than I got Attendance Allowance for him to help with costs.

So I think the take home from this is that your father is actually very lucky, as having funds will buy him choices - and in this area, that is a substantial tick in the plus column.

One of the things you might look at is an immediate needs annuity - this page explains them:  https://www.moneyhelper.org.uk/en/family-and-care/long-term-care/immediate-needs-annuity  we applied for quotes for Dad - I think you'd need to go through an independent financial adviser - but due to medical stuff that doctors were very slow to respond to, it didn't get sorted in time for us.

In the meantime, if you want to put his substantial savings into better earning accounts, then he's perhaps best to do that whilst he can do so himself (with your assistance as required) as trying to do so under an LPA (which I hope you already have, if not, that's something you really can do now) is much more problematic, as we've discussed this in the savings forum here.

silvercar

You need to see a financial advisor, one that specialises in trusts etc.

Keep_pedalling

silvercar said:

You need to see a financial advisor, one that specialises in trusts etc.

Why would the OPs father need to set up trusts to avoid having to pay for their own care? Such trust are usually sold by dodger ‘advisors’ for the fat fees they earn in selling inappropriate trusts. The OPs father might well be advised to seek advice from an IFA but this is not down to the OP.

Gers

There's a very clear article about this in the Guardian today.  Well worth reading it.