Deprivation of Assets

Black_Monk

Dear All
Three years ago my father passed away.  I brought my mother down to live with myself and my family.  My mother has generously given both of her grandchildren £100K each from the sale of her house to get on the housing market.  If at a later date she had to go into care would my local authority regard this as 'deprivation of assets' where someone disposes of assets to avoid care costs?  If so is there anything that can be done to mitigate this?
Kind regards
Black_Monk

Brie

Yes they likely will consider it DoA.  It might be ok if it's a very long time before she needs any assistance.  

I know it's not the same thing but there's an amount that can be gifted that means the amount wouldn't count towards IHT.  When MiL gave us a lump sum to help buy a house where we could live with her (slightly different to your situation) I logged this amount as a gift each year she lived with us against the amount initially given.  My line to the local authority was that she was essentially paying in advance for her lodging.  

Should they decide to get really nasty they might place a charge on the kids homes so that they get all/some of the money back when those homes eventually get sold.  

sammyjammy

After giving this gift what assets does she have?  If she is likely to be self funding anyway this lessens the issue.

Keep_pedalling

If she sold her house for £200k and had no other significant savings, then yes it is, if she sold it for £700k then no it’s not. 

In your other thread you say she is 90 and has dementia, so there is no way to mitigate this. 

HillStreetBlues

Keep_pedalling said:

If she sold her house for £200k and had no other significant savings, then yes it is, if she sold it for £700k then no it’s not. 

In your other thread you say she is 90 and has dementia, so there is no way to mitigate this. 

That would also open up another possible issue depending how bad the dementia is.

Grumpy_chap

I understand with DoA there is an element of what the intention was when the funds were gifted.  If the intention was clearly to avoid care costs, then it is clearly DoA.
If the argument stands up to scrutiny that, at the time of making the gifts, the foreseeability of needing care was zero because of moving in with the OP who will provide all necessary care, then that weakens the DoA. 
Is the gift to the two children of £100k each to support them onto the housing ladder in the imminent term, or are the children young and any prospects of buying first house far away?  This would influence any assessment as to whether the intention was to support the grandchildren in their housing needs or primarily to divert funds away from the OP's mother.
I am not sure that the above two cases would satisfy scrutiny if DoA is considered - in particular, the suggestion that future care needs are remote is not viable given the OP is specifically asking that question at the time the gift is being made.

Does the OP's mother have the capacity to make these gifts, given she is 90 yo and has dementia?
Is the OP's mother making a free decision, or are her affairs managed under PoA?

What are the OP's mother's total assets from which the £200k will be gifted?

elsien

Brie said:

Yes they likely will consider it DoA.  It might be ok if it's a very long time before she needs any assistance.  

I know it's not the same thing but there's an amount that can be gifted that means the amount wouldn't count towards IHT.  When MiL gave us a lump sum to help buy a house where we could live with her (slightly different to your situation) I logged this amount as a gift each year she lived with us against the amount initially given.  My line to the local authority was that she was essentially paying in advance for her lodging.  

Should they decide to get really nasty they might place a charge on the kids homes so that they get all/some of the money back when those homes eventually get sold.  

It’s not that simple. The local authority would have to show that it was done with the intention of avoiding care costs  and also there was a reasonable expectation at the time that she could foresee she might need care. 

It is more likely that she may need care if she’s late 80s with dementia, then in her 60s with no health issues. As an example.

Black_Monk

Dear All

Many thanks for taking the time to reply to my question.  Unfortunately my mother had a dementia diagnosis before the first gift was made so, although it was not our intention, it would be seen as DOA.  I guess I will just have to set aside some money for that eventuality.

I do not think it is unreasonable to be asked to contribute to your care costs.  What I do find unjust is people like my parents who worked hard all their lives and made sacrifices to put money away for a rainy day will lose most of their estate if they have to go into care, whereas someone who squandered their money will receive the same care for free.  Not a good incentive to save for your retirement.

Kind regards

Black_Monk

sheramber

Black_Monk said:

Dear All

Many thanks for taking the time to reply to my question.  Unfortunately my mother had a dementia diagnosis before the first gift was made so, although it was not our intention, it would be seen as DOA.  I guess I will just have to set aside some money for that eventuality.

I do not think it is unreasonable to be asked to contribute to your care costs.  What I do find unjust is people like my parents who worked hard all their lives and made sacrifices to put money away for a rainy day will lose most of their estate if they have to go into care, whereas someone who squandered their money will receive the same care for free.  Not a good incentive to save for your retirement.

Kind regards

Black_Monk

whereas someone who squandered their money will receive the same care for free. 

On the contrary, the standard of care provided by the council can be pretty poor.

No choice of location. You go where they send you , which may not be near family.

It will be in the cheapest care home available which will not be comparable to waht a slef funding person canchose.

There are no extras that those paying their care can choose,



https://www.turn2us.org.uk/get-support/information-for-your-situation/care-homes-and-benefits/frequently-asked-questions#:~:text=You will still get your,to the cost of care.

You will still get your Basic State Pension or your New State Pension if you move to live in a care home. However, if your care home fees are paid in full or part by the local authority, NHS or out of other public funds, you may have to use your State Retirement Pension to pay a contribution to the cost of care. 

You should always be left with a weekly personal expenses allowance of at least:

England: £28.25
Scotland: £32.65
Wales: £39.50
Northern Ireland: £27.19 

Black_Monk

Dear sheramber

Thank you for the correction.  I wish that was more generally known.

Regards

Black_Monk

KxMx

Assets also allow the choice of when care is started. Seen a friend have a 3 year battle to get relative with dementia into a council funded care home. Multiple professionals were also trying on their behalf in that time. Social services refused funding, instead increased care visits to maximum and immediately pressured family to call in on top. 

Person only granted a place following a hospital admission as discharge to anything other than a care home was refused by staff.