Query on parent gifting money.

Matt_73

My Father in law has recently received a good size inheritance of 175k after the passing of his brother.

He is 88 years old and wants to gift a healthy amount to each of his three children. 

He is in a council house and has no other assets other than 10k he had before the inheritance. 

So, it's my understanding that when he passes, no matter what he gifts there would be no inheritance tax to pay. 

Here is my worry. If, in a few years he ends up in a care home or some form of care, would gifting a large amount to each of his three children be frowned upon. 

He is a very fit and able bodied 88 year old and at this present time nowhere near needing any social care, but you just never know what is round the corner at 88 years old. 

The entire family are all within ten minutes of him too, which also lessens his chances needing any form of social care. 

I'm of course going to seek specialist advice next week, but he wants to make these large gifts for his children to enjoy and my worry is whether that would be classed as deprivation of assets? Even if social care isn't even on the horizon at this present time. 

Any advice appreciated 
Matt

Linton

If your FIL’s total assets including the inheritance are less than £325k there will be no IHT to pay. The tax arising from a gift cannot be higher than if he had kept the money.

At 88 I would have thought that deprivation of assets would be a serious risk. Of course if support from the family is sufficient to provide all the care he may need in the future the issue won’t arise.

km1500

there is a risk it maybe seen as deprivation of assets but it is not clear cut

if at the moment he is fit and healthy and sees no need either now or in the immediate future for a care home then he could argue it is not a deprivation of assets and would stand a good chance of succeeding

When your council is deciding whether getting rid of property and money has been a deliberate deprivation of assets, they will consider two things:

1. You must have known at the time you got rid of your property or money that you needed or may need care and support
2. Avoiding paying for care must have been a significant reason for giving away your home or reducing your savings.

https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/deprivation-of-assets/

Reed_Richards

It may be too late but your Father in Law could have executed a Deed of Variation to his brother's will so that the money he wanted to pass on to his children passed directly.  If there is no inheritance tax to pay when your father in Law dies then it doesn't much matter but this is a perfectly legitimate way of avoiding inheritance tax.

I have no idea how this would be treated with regard to deprivation of assets.

Sea_Shell

You mention £10k of pre inheritance savings...is he on Pension Credit?

(as that is their limit before it starts being reduced)

Keep_pedalling

This would almost certainly be seen as deliberate deprivation of assets given his age and low level of existing savings. Frankly he would be foolish to give the bulk of it away as it provides him greater security for his final years. It means it can fund care when / if he needs it rather than having to wait until he is decrepit enough to get LA funding approved. This is not just about care homes it is about choices, with this money he could choose to rent in sheltered housing or in assisted living for that little bit of support most people need at this age and beyond.