Gifts & Deprivation of assets

APMASON

I have a questions regarding the deprivation of assets & Gifts.
My parents sold there house around 18 months ago and moved into a house i own, they gifted me the proceeds and the solicitor handling the sale deposited the money directly to me.
The reason for moving was primarily based on their mobility as they are in their 80's and i had a bungalow that i only occasional lived in. The value of their house was only 220k and therefore i am not worried if it ends up as part of their estate for IHT purposes.
However in the future could this money be included to pay for care fees etc. I'm not expecting them to go into a care home anytime soon, but my mother recently had a fall and we decided to have some additional paid help 3 times a week. More than happy to pay for this and it is coming out of their pensions as they have a reasonable pension and savings of around 50k.

I haven't spent the money they have gifted me but i am recording on spreadsheet a monthly contribution towards running of the house they are now occupying that is reducing the 220k over time.

Do i need to be careful with what i do with the 220k as i may need to make it available for care fees in the future, if one of them were to go into care would the 220k be split and 110k would be needed to contribute to the care fees of one parent?

Any advice or information would be appreciated as it would be useful to be able to spend some of the gifted money to pay down the mortgage on the house they are residing in
     

TimeLord1

Probably best to keep it away from your own finances and payments in a separate account and if they need anything just have it documented. Have you taken over guardianship either unlimited in scope or limited to financial management or personal care. The solicitor should also advise you on the best possible solution. 

poppy10_2

Would almost certainly get clawed back if they need to go into a care home in the next few years 

APMASON

TimeLord1 said:

Probably best to keep it away from your own finances and payments in a separate account and if they need anything just have it documented. Have you taken over guardianship either unlimited in scope or limited to financial management or personal care. The solicitor should also advise you on the best possible solution. 

yes i have POA but they dont need it. i do keep it separate and i take 1k per month from the 220k for running costs for the house. The solicitor simply put the money into my account as a gift when the house sold and they now live in a house i own which was 10 minutes from their old house but is a bungalow so they don't have to modify anything to live. Whereas in there house there was no downstairs bathroom or bedroom facilities, hence the move was required and this was the best solution

APMASON

poppy10_2 said:

Would almost certainly get clawed back if they need to go into a care home in the next few years 

They are not likely to need to in next couple of years and they have enough income/savings to cover any fees for a year or 2 if it happens, i read somewhere on here that they only look back for 2 years, so even if they were to go into care imminently it would have been 4 years since the sale of the house when they would be looking to claim assistance, as i believe the lower limit for savings is 22k before you can receive assistance towards the care home fees.

Maybe spending the gift is the best option as if it is sat there in an account it will be much more obvious for claw back ;-)

kaMelo

There is no time limit for looking into deprivation of assets however it would be for the council to prove deliberate deprivation to avoid having to pay care fees.

If your parents will/may be subject to inheritance tax then the financial gift would almost certainly be considered a PET and treated as though they still had the money.

APMASON

Thanks, sounds like they should be ok, as the move was to enable quality of life in a bungalow, their issue was they couldn't afford to buy a bungalow and i have one i hardly used since moving location for work. But i guess only time will tell and i shouldn't spend the money other than using it to cover costs of the house they now reside in. Would be nice to pay down the mortgage on that place though!

Should be fine for inheritance, with that money they have about 300k between them. I believe the allowance is 300k plus each.

ader42

Personally I think if the worst happened then you keeping a spreadsheet and “taking 1k per month for running of the house” will be irrelevant and won’t wash with the council.

If you wanted that approach you should have had a formal market rate rental agreement and actually acted as a professional landlord with your parents keeping their equity and actually paying you rent. The council will consider the “rent” you are taking as a contrived tenancy, just as they would if your parents tried to get housing benefit for living in your house.

Your parents will be considered to currently have 220k and the council will not provide care funding - especially as there is no property for them to place a charge against. 

A better option may have been for you to formally sell them equity in your bungalow.

Hopefully the care costs issue will not arise as you’ve perhaps been a bit naive. 

Rubyroobs

Local authorities can go back years if they think there has been a deprivation of capital issue and they are now paying out for care.

Mands

APMASON said:

poppy10_2 said:

Would almost certainly get clawed back if they need to go into a care home in the next few years 

They are not likely to need to in next couple of years and they have enough income/savings to cover any fees for a year or 2 if it happens, i read somewhere on here that they only look back for 2 years, so even if they were to go into care imminently it would have been 4 years since the sale of the house when they would be looking to claim assistance, as i believe the lower limit for savings is 22k before you can receive assistance towards the care home fees.

Maybe spending the gift is the best option as if it is sat there in an account it will be much more obvious for claw back ;-)

There's no 2 year rule. There is, legally, no time limit on how far a local authority can go back to look for deprivation of assets. It's unlikely, but not impossible, for them to look more than 15 years.

You said, upthread, that they have about £50k in savings but also that they probably have enough money for a couple of years of care home fees for them both. Care homes are pretty expensive. You can pay more or less depending on the quality but using £1k per person per week as a start point is not unreasonable. A friend has just arranged one for her mother-in-law that's costing over £100k per annum. On the average costs their savings would cover one of them for one year or both of them for half a year.

Finally, spending the house proceeds puts you in a worse position, not better. If you need help with their fees you, and they, will need to make full financial disclosure as part of the process. That will include detailing what happened to their house and where the proceeds are. If the money has been spent, and the local authority deem that deprivation of assets and refuse to assist, then you have a looming care home bill and no lump sum to pay it with.

Keep_pedalling

What does this leave them in terms of savings? DOA is far less likely to be an issue if they still have sufficient assets to fund residential care for the initial period.

Worse than DOA is being totally dependant on a LA to provide needed care, because it will take a lot longer to get a place than a self funder and you will be left with a far smaller choice of homes.