Mothers Life Assurance Bond

GarbageGuy

My Mother has a life assurance bond with Royal London, with a cash in value of £118K

My mother would like me to have the money now before she dies as she has Altzheimers and getting worse, im worried about tax.

I have a joint bank account with her, If I get it paid into that instead of my own solo account would some of the tax be offset to her tax allowance?

Im unsure of her initial investement as she has withdrawn from it and re invested in it, I know she took £33K out in 2007 to buy her flat, then later reinvested £40K when her house sale went through.

We plan to see a financial advisor over the tax concerns, but wanted to get a rough idea.

My wife and I are both 60 and we have a financial LPA for my mother.

I have already reinvested £40K of her money into Premium Bonds in my name that was sat in her low interest bank account. on her advice.

Thanks

Brie

Well yes if the money was in a joint account with you the ongoing interest that is paid would be assumed to be 50/50 for the 2 of you.  But that is different than tax the might be charged for withdrawing money which should all be down to your mother to pay.  I'm assuming this will be some sort of CGT which RL might pay directly on your mother's behalf.  The T&Cs of the bond should make that clear.

And this would not necessarily get around IHT rules should she die within the next 7 years.  Assuming her estate is such that IHT would be due.

As for you taking her money and putting it into an account solely in your name then I'd say that's dodgy.  You could be questioned about hiding her money, should there be any investigation regarding deprivation of assets by anyone. How is you taking your mother's money benefiting her at all.  Having an LPA you should be acting in your mother's best interests, not yours.   I'd suggest you sort this out sooner rather than later.  

Keep_pedalling

You really should not have put any of your mother’s money in your name.

You say you are worried about tax and I assume you are talking about IHT here, so the first thing we need to establish is would her assets actually take her into IHT territory. What is the total value of her assets? What is her marital status? Is she a home owner or was she recently a home owner?

GarbageGuy

Keep_pedalling said:

You really should not have put any of your mother’s money in your name.

You say you are worried about tax and I assume you are talking about IHT here, so the first thing we need to establish is would her assets actually take her into IHT territory. What is the total value of her assets? What is her marital status? Is she a home owner or was she recently a home owner?

Thanks for the replies
She lives alone in her own flat with a warden on duty, value of her flat may be about £75k with 20% going back to the company that owns the building on sale.
She has an annuity that pays £99 a month with no surrender value.
she has about £3500 in the joint account.
She gets about £600 a month from disability benefits. 
Its her wish that I take all the money and "enjoy life" as she put it. 
She is 92 and still going strong for her age, but struggles to walk far.
I was worried about the tax to pay if I cashed the Bond in not inheritance tax, 
would an investigation be triggered after her death? im the sole beneficiary in her will.I do know about the 7 year rule, as many years ago she gave me £100K.
If I were to suddenly die, I have a wife, the LPA is in her name, so she would still support my mother.

GarbageGuy

"The T&Cs of the bond should make that clear."
I dont have the original bond, I have a few reciepts showing payments into the bond.

masonic

The main issue, then, seems to be that it's foreseeable that she will continue to deteriorate and presumably need more care than she is receiving now. So deprivation of assets would be a concern. She would likely be treated as still having the £118k when means-tested by the local authority. Which could leave her unable to get the care you would want for her if you do as she wishes and use the money yourself.

Regarding the bond, you should definitely dig out the paperwork before you speak to a financial adviser about it, because the devil will be in the detail regarding tax implications. For the same reason, you are unlikely to get any insights here without knowing more about the exact type of bond and its T&Cs.

dunstonh

My mother would like me to have the money now before she dies as she has Altzheimers and getting worse, im worried about tax.

As it stands, it will be outside of the means test for any care assessments.    However, if you cash it in, it will be included in the means test and if she passes it to you, then it will fall foul of deprivation of assets.

GarbageGuy

masonic said:

The main issue, then, seems to be that it's foreseeable that she will continue to deteriorate and presumably need more care than she is receiving now. So deprivation of assets would be a concern. She would likely be treated as still having the £118k when means-tested by the local authority. Which could leave her unable to get the care you would want for her if you do as she wishes and use the money yourself.

Regarding the bond, you should definitely dig out the paperwork before you speak to a financial adviser about it, because the devil will be in the detail regarding tax implications. For the same reason, you are unlikely to get any insights here without knowing more about the exact type of bond and its T&Cs.

I Have talked to Royal London and asked them to send me the T&C for the bond, but it hasnt arrived, I will chase it up on Monday

As we have LPA could we pay the bond into my wifes account and be outside the means testing, Mum says her flat will pay for any care needs she has.

Thanks

xylophone

As we have LPA could we pay the bond into my wifes account and be outside the means testing, Mum says her flat will pay for any care needs she has.

If your mother deteriorates to the point  where she needs full time care in a home, then I'm afraid that £75000 (value of flat) is unlikely to last long.

Five years ago my relative's relative was paying well over £60,000 a year.

The lady in question lived past her 97th birthday.

Your mother's money needs to be held in an account in her name with you/wife as  Attorney.

Linton

GarbageGuy said:

masonic said:

The main issue, then, seems to be that it's foreseeable that she will continue to deteriorate and presumably need more care than she is receiving now. So deprivation of assets would be a concern. She would likely be treated as still having the £118k when means-tested by the local authority. Which could leave her unable to get the care you would want for her if you do as she wishes and use the money yourself.

Regarding the bond, you should definitely dig out the paperwork before you speak to a financial adviser about it, because the devil will be in the detail regarding tax implications. For the same reason, you are unlikely to get any insights here without knowing more about the exact type of bond and its T&Cs.

I Have talked to Royal London and asked them to send me the T&C for the bond, but it hasnt arrived, I will chase it up on Monday

As we have LPA could we pay the bond into my wifes account and be outside the means testing, Mum says her flat will pay for any care needs she has.

Thanks

Using power of attorney to put the donor's money into your wile's account is a bad idea.  A PoA only has the authority to act in the donor's best interest and it would be difficult to explain how giving the money to your wife is in your mother's best interest.

GarbageGuy

Reading online the means test is capped at just over £23500 , as my mother has more than this, would I need to worry about a means test as If she went into a care home, we would be liable for all fees anyway?

Interesting to see there is talk of an £86000 cap on care home fees put back to October 2025

as her bank account and selling her home, should cover that.