?? Deprivation of assets???

Olawat

I have a question in regards to gifting money and whether it could be construed as Deprivation of assets. 

My 94 year old widowed mother, who is in very good health for her age, has all her faculties and lives alone in rented sheltered accommodation, is wanting to gift some of her savings to her 3 children. 

Now I know that she would be allowed to gift sums of £3000 in total per financial year, so if she were quick she could use her allowance for 2024/25 plus £3000 from 2023/24 ( as she didn’t use her allowance for that financial year), plus she could gift £3000 after mid April 2025 for the following financial year. This would be a total of £9000. 
Could this still be seen as Deprivation of assets if for some unforeseen reason she were to require care in the future, even though she has kept to the recommended £3000 limits??
Her savings would then be around £75,000. She does not own property and has no other assets. 

Also would it be worth her making some form of written declaration signed by herself to each of us 3 children, stating that the money was gifted so that it proof were needed, it would show that she was not coerced into doing this ( of which she isn’t. She has asked me to look into this for her) ?  

Thank you. 

Keep_pedalling

People are allowed to gift as much as the like, the £3k annual exemption is the amount you can gift without it falling under the 7 year rule for IHT and has nothing to do with deliberate deprivation of assets. As she is far away from having an IHT liability this is really irrelevant.

Deprivation of assets is not so clear cut and is not an exact science. £75k is not a huge amount of money and would be quickly eaten up if she had to move into residential care. I don’t see any problem with her making a one off gift to each of them, but I think it would be unwise to go above 10%  in total (£2.5k each). 

zagfles

See Deprivation of assets in social care
But you seem to have misunderstood the £3000 allowance, there is no limit on gifts, just that gifts above a certain value could be counted for inheritance tax, but from the above she's nowhere near the IHT threshold of £325,000 so the IHT allowances are irrelavent. And as per the Age UK link IHT gifting rules are not relevant to deprivation rules. 

kimwp

Deprivation of assets can be done by the person who owns the money in the first place - it's about giving away assets so they don't get taken by the local authority to pay for care. So having something signed to say she's not been coerced would just mean that they would be more likely use the value given away in the calculation of her assets when determining whether to pay for care, I would think.

Exodi

To be honest, I don't think it looks good.

What's your mum's reason for wanting to gift it now? Perhaps a tad morbid, but objectively as a 94 year old she likely has years left, rather than decades. Why not pass it on in inheritance? Why not 10 or 20 years ago when you probably needed it more?

The main checks for DoA are whether someone knew they would need care or support, whether reducing their potential care liability was the reason for giving away assets or whether they knew they would need to contribute money towards their care.

At least one of these is relevant, and cynically you could perhaps suggest all 3 could be considered relevant.

If the council were to ask 'why', what would be the answer? It's a significant part of the estate (36% as you propose, but likely higher now you know IHT gifting limits aren't relevant) and it's clearly not due to IHT mitigation and the children would inevitably inherit it within a relatively short time anyway. (Again, sorry for being morbid).

elsien

At the age of 94, I don’t think you could say that potential future care costs would be considered to be unforeseen.

Mands

elsien said:

At the age of 94, I don’t think you could say that potential future care costs would be considered to be unforeseen.

Or 5 years ago when the he asked the same question but with different amounts

Grumpy_chap

Olawat said:

I have a question in regards to gifting money and whether it could be construed as Deprivation of assets. 

My 94 year old widowed mother, who is in very good health for her age, has all her faculties and lives alone in rented sheltered accommodation, is wanting to gift some of her savings to her 3 children. 

Now I know that she would be allowed to gift sums of £3000 in total per financial year, so if she were quick she could use her allowance for 2024/25 plus £3000 from 2023/24 ( as she didn’t use her allowance for that financial year), plus she could gift £3000 after mid April 2025 for the following financial year. This would be a total of £9000. 
Could this still be seen as Deprivation of assets if for some unforeseen reason she were to require care in the future, even though she has kept to the recommended £3000 limits??
Her savings would then be around £75,000. She does not own property and has no other assets. 

Also would it be worth her making some form of written declaration signed by herself to each of us 3 children, stating that the money was gifted so that it proof were needed, it would show that she was not coerced into doing this ( of which she isn’t. She has asked me to look into this for her) ?  

Thank you. 

With that £75k remaining after the gifts, she will be able to self-fund about one year or so of care should the need arise.  After which, she would be below the threshold for the LA to contribute to care costs.
How foreseeable is it that she will need care?
How foreseeable is it that she will need more than one year in care?

RAS

We were advised that most people need less than 3 years residential care, but one person in that age group I know has been there 6 years already. 

kimwp

Really, she needs to keep the money, either for living or for care. If she passes, what's left goes to her children without losing anything to tax.

Spendless

RAS said:

We were advised that most people need less than 3 years residential care, but one person in that age group I know has been there 6 years already. 

My maternal Nan went in a care home the month before her 91st bday (she had dementia) and died there 8 years later shortly before her 99th bday.