Ill Parent - Financial & Estate Planning

pollypenny

Keep_pedalling said:

pollypenny said:

My father simply made me a signatory on his accounts.  I managed his bills and paying for his residential home by phone banking usually. 

That is not the best option as it should no longer be used if the account holder looses mental capacity. Setting up LPAs should be something we should all do but like wills most don’t. 

Sadly we knew that he was likely to die before there was any chance of losing capacity.  

jmr95

In the end I didn't end up going down the joint account route. 

Another question I have. If my parent decides to transfer money to me after being told their illness is terminal with life expectancy under 12 months, is that ok?

No issue with capacity. I know it will from part of the estate. The idea is to lessen the burden of having to deal with the banks to ultimately get the same money. 

RAS

Many banks will release substantial funds on receipt of a copy of the death certificate or the will and the holder's ID. Your parent might want to check the limits each of their accounts, some are as high as £50k? 

jmr95

Ah ok, so they won't necessarily need Probate?

I'll need to get it regardless due to property, but if I can contact the banks without it that helps. 

Id prefer my parent was not worrying about it to be frank. I'll do the legwork when the time comes. So if it's not too difficult to get, this will come as a relief. 

RAS

You need to let all the banks' bereavement departments know that the person is deceased and they will freeze the accounts until they have the information.

Don't expect them all have the same limit or to require the same documents. Some may want an appointment where you take the documents, others will be happy with a scan of the will and/or death certificate and your ID. Photo ID preferably. They are not going to release the money to you if there is a will naming someone else as executor, but otherwise, you complete a form and return it.

So wise to know which have the higher limits. It's also useful if there is IHT to pay as this has to be done before probate is granted, although even accounts above the limits will often pay HMRC directly.

Ask the funeral director to send the bill to one bank and they will pay direct if need be. 

jmr95

Thanks. What may help here is:

- Estate is under IHT threshold 
- Will in place. I am executor and beneficiary. 
- funeral plan in place

Coming back to my earlier question though is there any implications of my parent simply transfering the money to me before death?

I'll need Probate for property but if I can avoid banks and parent is willing it would be easier when the time comes. 

Mands

jmr95 said:

Thanks. What may help here is:

- Estate is under IHT threshold 
- Will in place. I am executor and beneficiary. 
- funeral plan in place

Coming back to my earlier question though is there any implications of my parent simply transfering the money to me before death?

I'll need Probate for property but if I can avoid banks and parent is willing it would be easier when the time comes. 

Yes, you can do that if it helps the practicalities. 

You should keep clear records and include the funds as part of their estate when it comes to probate. IF their situation changed and their diagnosis turned out to be incorrect AND they needed to be in a nursing home you would need to include the funds in the calculations to establish whether they were entitled to funding. 

But it sounds like the situation is clear. I'm sorry for you both. Do what you need to do, keep and audit trail. 

You would be welcome to join us on the Wills and Probate board (a sub-forum to this) even though you are not at that point yet. The regulars are a sympathetic and knowledgeable bunch who have, collectively, seen most scenarios. 

Mands

jmr95

Thank you Mands. Yes, I've set up a bank account that will only be used for this process and a full audit trail will be kept. 

Totally appreciate the point about funding should that happen and would keep that in mind. 

I'll keep your suggestion for the sub board in mind. Thanks again. 

jmr95

Just another question here as I got a bit spooked.

I am aware of the 7 year rule around gifts and that they are potentially exempt transfers, but would then need to be brought back into the estate value should the gifter pass away within 7 years.

What I did not know (and what I want to clarify) was how this may change the Nil Rate Band if given prior to death?

The combined money + property (I am direct descendant) is well under the IHT threshold but am I potentially facing a big tax bill if my parent transfers money to me themselves? and would i therefore need to declare this as a gift when reporting on the estate?

thanks

RAS

It's very difficult to understand what situation you are referring and what your query is?

Re-reading, you appear already to have LPAs in place? If your father wants to transfer some money to you then he can do so, but it remains within his estate.

If you have power of attorney, you cannot transfer money to yourself or other family members from your father's account to yours except in very limited cases. And you need to keep very clear accounts of all transactions. 

If you have to buy something for him, you can reclaim that money. 
If there is a long history of him gifting £100 to a family member each year, you can continue to do that but you can't increase that to £500. You can use his money too buy them birthday presents if he's unable to do so, same rules apply.

By the way, don't get too hung up on life expectancy. I saw a friend a couple of weeks ago. When I first met him, he'd survived a year with an illness that often killed in weeks or months, then he passed his 2 year anniversary. 

New treatments have been found and we were discussing the trauma of being one of longer surviving patients in support groups, as many people still survive less than 2 years. 

On the other hand another friend with a different illness died less than a year after diagnosis for which the prospects were much better.

Had the first friend not been told his life expectancy was so short, he'd have made different financial decisions, some of which are coming back to bite him.