Inherited premium bonds - can they be given away without it being seen as a deprivation of assets?

L1ttleD0nkey

My elderly mother is 85 and has inherited £17,300 from my late father's premium bonds. Can my mother gift some of this money to her grandchildren or would this be looked on as a deprivation of assets if she needed to go into a care home in the future?

At present she lives in her own home and there is no immediate sign that she will need to go into a care home but, as we know, that could change if she were to have a fall or there was a sudden deterioration in her health. Her estate will not be subject to inherit tax. 

Keep_pedalling

Unlikely as she has a house that could be sold to fund residential care in the future. What other liquid assets does she have? If giving this away leaves her with little in the way of an emergency fund then she should not do it. 

noitsnotme

Depends how much the rest of her estate is worth.  Could she self fund care after this money was given away?

And just to note in case you are not aware, you can’t give premium bonds to other people.  They would need to be cashed in first and the money gifted.

elsien

Keep_pedalling said:

Unlikely as she has a house that could be sold to fund residential care in the future. What other liquid assets does she have? If giving this away leaves her with little in the way of an emergency fund then she should not do it. 

it isn’t just about residential care though. She may also need to pay for care at home in which case if she has no other assets then it could be queries around this given her age. 

If she has no other assets she’s very close to the 14 1/2 K cut-off anyway so less of an issue with regard to deprivation of assets however if she has nothing else it would be silly to give away that amount of money and leave herself with little to back on. 

L1ttleD0nkey

noitsnotme said:

Depends how much the rest of her estate is worth.  Could she self fund care after this money was given away?

And just to note in case you are not aware, you can’t give premium bonds to other people.  They would need to be cashed in first and the money gifted.

The premium bonds were cashed in. 

noitsnotme

L1ttleD0nkey said:

noitsnotme said:

Depends how much the rest of her estate is worth.  Could she self fund care after this money was given away?

And just to note in case you are not aware, you can’t give premium bonds to other people.  They would need to be cashed in first and the money gifted.

The premium bonds were cashed in. 

To be picky, the title of the thread is a little misleading.  The premium bonds are irrelevant if they have already been cashed in.

sheramber

L1ttleD0nkey said:

noitsnotme said:

Depends how much the rest of her estate is worth.  Could she self fund care after this money was given away?

And just to note in case you are not aware, you can’t give premium bonds to other people.  They would need to be cashed in first and the money gifted.

The premium bonds were cashed in. 

So, it is a cash sum.

Dies she have other capital available?
 

As previously highlighted, not all elderly people  go into care. 

 It can be a care at home situation with carers visiting. 

That  could be self funding and if she does not have  any capital to pay for that there may be a deprivation of capital decision made. 

Smudgeismydog

When did your father die? Your mum can gift some or all of the inherited cash under Deed of Variation, if done within two years of his death.
This means that it wouldn’t be classed as a Potentially Exempt Transfer (PET) for your mum within inheritance tax purposes, if that is a consideration. 

Keep_pedalling

Smudgeismydog said:

When did your father die? Your mum can gift some or all of the inherited cash under Deed of Variation, if done within two years of his death.
This means that it wouldn’t be classed as a Potentially Exempt Transfer (PET) for your mum within inheritance tax purposes, if that is a consideration. 

Even if IHT was an issue a DoV is pointless when someone has inherited from a spouse. The DoV would mean that this part of the estate would no longer be subject to spousal exemption, so part of his NRB would be used up  therefore lowering the transferable NRB available for her estate, therefore the effect on IHT would be neutral if the surviving spouse survived under 7 years but would actually increase IHT liability if they survived 7 years or more.

Stateofart

I know premium bonds are classed as part of an estate.  I've heard of people getting into hot water re: filling up sons/daughters accounts to the 50K max trying to avoid tax.

Exodi

Stateofart said:

I know premium bonds are classed as part of an estate.  I've heard of people getting into hot water re: filling up sons/daughters accounts to the 50K max trying to avoid tax.

I have no idea why anyone would assume they aren't?

The scenario your describe in your latter sentence is no different than just 'gifting' tens or hundreds of thousands of pounds in cash or signing their house over (while still living in it, wink wink, nudge nudge) before care/death.