Deprivation of assets vs just spending as you go along

Veteransaver

What happens if say you gift pretty much all of your assets and die within 7 years.
Gifts were made in cash. Virtually nothing left in the estate, Eg no property to speak of.
The gifts are added back into the estate for IHT purposes, but if there is no money in the estate to pay the IHT then who does HMRC go after?
If the deceased didn't keep records, or payments were in cash? What realistically would happen then? Estate would surely just be insolvent.

Floss

Kirkmain said:

HouseMartin567 said:

Kirkmain said:
That's the thing. I have seen friends go into facilities, paying through the nose. £1500per week in one case. In the room next to them, arguably with a nicer view. Getting the same care. The same activities, the same food. Only this fella gets it all for free. Why? Because he was smart enough to spend his money and live life, and treat his family as he went along. Never owned a property, only rented. But on chatting to him, this fella who gets his room for free has been on more foreign holidays than my mate who now has to pay with his estate when he dies. Make it make sense please

In my experience, the situation you describe is a rarity, and that local authority funded care is likely to be on the lower class/quality of care home.

I'd say it's the rule rather than the exception. Speaking to the care home manager 60% of the residents in this home don't have to pay a penny, either because they have never worked or never owned anything. But their children visit driving BMWs and range rovers

But who knows if they are owned or leased cars? Or up to their ears in debt?

Floss

@Kirkmain why don't you book yourself onto a series of cruises - level 5 care with good food, activities, high staff to passenger ratios....

justwhat

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

Not all council care homes are dumps. Councils don't own all care homes

Brie

amanda1024 said:

I’m worried by Brie’s story because (like most my generation) my parents gifted me some money to help buy a house. Or was the issue specifically that MiL sold her own home and the money came from that? I agree with Kirkmain! I suppose one thing would be to buy experiences - holidays etc - rather than gifting cash?

Kirkman seems to be missing the point on purpose about little gifts and flagrantly giving away large amounts so LA has to step in.  Yes in our circumstances some of it was that specifically MiL sold her house to give us money to buy ours. My arguement with the LA is that it meant she got 5 years of care with her family looking after her daily rather than the LA having to provide multiple carers daily to keep her living in her own flat which she could not get out of. 

If parents have lots of money, are healthy, say 50ish, and give their kids £20k each as a down payment it's unlikely to be an issue if they go into care 30 years later and 10 years after that need assistance.  If they were selling up to downsize due to health and gave you £100k then it might be looked at differently.  

And every council is different in their approach.  You'll get sensible people who look at the whole situation and others who will be simply officious.

badmemory

Well one thing I have seen is that if you are NOT self funding it appears to be harder to be placed in a care home.  Harder too to go into rehabilitation after a serious ailment when living on your own.

HillsideRetired

The idea that having money buys better care is potentially true as it does give you a choice , however i will share my experience . 
my mother is in a nursing home cost to a private funder is  £220 per day . the home is 4 x 20 bed dementia units purpose built ,60% of the service users are LA funded . its a great home , staff , facility's excellent . 
who knows if the 60% have had the spend , spend spend approach to life . and good luck to them if they have . 
they are living out the twilight of there life in a very comfortable environment  at the cost of the LA . 
where as the self funders are spending the thick end of 80k per year , for the same standard of nursing accommodation . 
moral of this story for me is take the Viv Nicholson approach .... 
 

Grumpy_chap

Brie said:

It's the difference between small, sensible amounts and substantial ones.  Buying a violin for a promising young musician is very different from giving a young adult or best mate a yacht.  The LA weren't bothered that MiL paid for the 3 of us to go on holiday costing £2k+ but they did object to her selling her flat and giving a portion of the proceeds to use to buy a place where we looked after her for 5 years before care was required.

Brie said:

And no people cannot gift their children chunks of money to get on the property ladder. That's DoA.

AIUI, things are not as "absolute" as these posts suggest.

Parents with own property and savings can gift their children a deposit to get on the property ladder.  Typically, the parents might be early 50's when this stage of life falls.

The difference is if the gift is later in life and leaves the individual with insufficient funds for their own requirements.

Kirkmain

HillsideRetired said:

The idea that having money buys better care is potentially true as it does give you a choice , however i will share my experience . 
my mother is in a nursing home cost to a private funder is  £220 per day . the home is 4 x 20 bed dementia units purpose built ,60% of the service users are LA funded . its a great home , staff , facility's excellent . 
who knows if the 60% have had the spend , spend spend approach to life . and good luck to them if they have . 
they are living out the twilight of there life in a very comfortable environment  at the cost of the LA . 
where as the self funders are spending the thick end of 80k per year , for the same standard of nursing accommodation . 
moral of this story for me is take the Viv Nicholson approach .... 
 

Exactly this. But how resentful and bitter would you be if had to pay for your care/ time in the care home, whereas the neighbour who might be beating you at Bridge is getting theirs for free, having enjoyed more holidays, nicer cars, more comfortable home. The smugness and joy of knowing your getting a freebie worth £100k a year.might even contribute to the one getting their care paid by the LA living a longer and more enjoyable end of the their life than the one who is paying out of pocket full of resentment and regret about their fiscally responsible and thrifty life choices.

400ixl

Kirkmain said:

Brie said:

And no people cannot gift their children chunks of money to get on the property ladder. That's DoA.

No it's not, it's called supporting your children, which is the essence of why anyone gets up in the morning to go to work.

Where do you draw the line? Is buying them nice clothes instead of Asda George DoA, is sending your kid to private school or paying for private tuition DoA. Or a parent who pays for a cleaner and a car valet instead of doing it it themselves so they can spend more time with their kids, is that DoA?

You are comparing something you do when they are an adult vs something when they are a child.

Timing is also important, gifting money to your child as a house deposit when you are in your 40/50's in good health is one thing, doing it in your late 50/60's or even 70's especially if your health is suspect would be a whole different matter.

Giving away money which is outside of your normal income in later years will be looked at, especially if outside of immediate family. There is no straight answer.

Also, your example of the care home is somewhat skewed. Yes there will be some LA funded people in some of the nicer care homes you would pay for yourself. But there will be a far higher number stuck in sub-standard care homes, which you will be far more likely to be in. That may though be nicer than the poverty you spend retirement in if you give away all of your assets.