Gifting and its consequences

wobbilybobbily

My Mother has recently sold her house and come to live with me, she would like to gift her money to her children, grandchildren and great grandchildren.  If she does this is there any tax's that need to be paid?

Keep_pedalling

The main issue will be deliberate deprivation of assets if she ever needs residential care. It would also be very foolish to give away her entire savings away when she may need them for her own needs. She may need it if anything happened to you (illness, death, divorce or bankruptcy). 

There are no tax issues however. 

Olinda99

Anybody can give away as much as they like without paying tax so your mother can give away as much as she wants

Depending on the size of the gift there may be inheritance tax implications if she does not survive seven years though

Regarding residential care - deliberate deprivation of assets will only be of concern if your mother wants someone else i.e the council to pay for her care.

NedS

Keep_pedalling said:

The main issue will be deliberate deprivation of assets if she ever needs residential care. It would also be very foolish to give away her entire savings away when she may need them for her own needs. She may need it if anything happened to you (illness, death, divorce or bankruptcy). 

There are no tax issues however. 

Potential inheritance tax issues depending on the size of the estate and the value of the gifts, should she pass away in the next 7 years?

Keep_pedalling

NedS said:

Keep_pedalling said:

The main issue will be deliberate deprivation of assets if she ever needs residential care. It would also be very foolish to give away her entire savings away when she may need them for her own needs. She may need it if anything happened to you (illness, death, divorce or bankruptcy). 

There are no tax issues however. 

Potential inheritance tax issues depending on the size of the estate and the value of the gifts, should she pass away in the next 7 years?

The worse that can happen is that the amount of IHT due is the same as if no gifts had been made. It would cause an issue for the recipients had spent it all as it would fall on them to pay the bill. 

wobbilybobbily

Thank you all for your comments, her estate as it stands is far less than the IHT, as its only around 200k, so if I understand keep_pedeling's comment correctly there shouldn't be a problem. 

RAS

Do remember deprivation of assets.

If your mum needs to live with you, it is reasonable to assume that she might need domiciliary or residential care at some point.

She or her attorney will have to declare the sale of the house and confirm the location of the assets. She will have to pay for her own care whilst the value of her assets exceeds £23k, and her assets for assessment will include the equity minus reasonable expenditure, regardless of what's in her bank accounts.

The LA will simply refuse to fund anything until the equity is accounted for. 

Do also look at attendance allowance though.

Olinda99

Only if 1. care was needed or could reasonably expect it to be needed in the near future and 2. the prime purpose for giving away the money was to avoid paying for care.

wobbilybobbily

There will be implications of depravation as my mother would live and be cared for by me, not all of her money would be gifted so she can do anything she wants.  Here estate in full is far less than 325k even after the sale of her house and other assets she has.

Keep_pedalling

wobbilybobbily said:

There will be implications of depravation as my mother would live and be cared for by me, not all of her money would be gifted so she can do anything she wants.  Here estate in full is far less than 325k even after the sale of her house and other assets she has.

The way you worded your opening post sounded like she was giving it all away, I am glad that is not actually the case. The fact that she will be living with you certainly reduces the chance that she will ever need residential care.

Savvy_Sue

Keep_pedalling said:

wobbilybobbily said:

There will be implications of depravation as my mother would live and be cared for by me, not all of her money would be gifted so she can do anything she wants.  Here estate in full is far less than 325k even after the sale of her house and other assets she has.

The way you worded your opening post sounded like she was giving it all away, I am glad that is not actually the case. The fact that she will be living with you certainly reduces the chance that she will ever need residential care.

Although do not underestimate the difficulty of caring for someone long-term: there may be an emotional attachment to that, but it can become just too hard, leading to ill-health for the carer.