Being gifted money from sale of house

Gen27

Hi everyone

Newbie here…..My uncle, 90 years widowed, has moved out of his home into a retirement village where he is paying monthly rent. His property is in the process of being sold at £250K.

He has enough in his current account, and from his pension and attendance allowance, to cover his rent and monthly expenditure (possibly dipping a small bit into his money). But he has approx £60K in his account.

His Will leaves his estate split 80% to his sister-in-law (my mother) and 20% to his niece on his side of the family. My sister and I are executors and we also have LPA for both finance and health and we are not named as any beneficiary unless our mother dies before him and it gets split between her children (ie myself and sister)

He still is in sound mind, although he happily asks me to deal with his paperwork and banking.

When he receives the money from the sale of his property he has told me he would like to pay for me to have my roof repaired on my own home which is approximately £10K. This is as a thank you for all the help given to him whilst moving etc (it's been a long hard 6 months!).

Anyhow the short question is….is this allowed without any repercussions? If the invoice for the roof work is invoiced directly to my uncle?

It is obviously a very generous offer and we would be grateful (and it is needed for roof repairs!) but I don't want to accept if there would be implications.

Thank you for your help

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/6665047/being-gifted-money-from-sale-of-house

Are you in any way active for the LPA?

Gen27

Yes I deal with his banking and bills and make appointments for his doctors etc.

Yorkie1

If his current assets are £60K, plus say £220-250K from the sale of the house, then his estate will not be liable for inheritance tax (he is a widower and so will have up to £1m IHT allowances), if that is part of the thought process.

You indicate that his current income does not meet his rental costs. He will therefore already be eating into his £60K.

£10K is a significant % of his current assets of £60K. Unless the house sale is very imminent, in my mind it would be most unwise of him to give away that amount at present. If the house has not yet received any offers from potential buyers, there is no knowling how long his ever-decreasing £60K will need to last him.

Also, at the age of 90, there must be a foreseeable chance that he may need a greater degree of care than his current needs require. That will be likely to be costly. Although he will have sufficient assets (after house sale) to fund that care for now, and so there is no immediate need for the local authority to pick up any of the costs for his care, he may run into deprivation of assets issues should he need more care.

Another poster has asked if the LPA is in active use yet. In other words, if you are already acting as LPA, your duties are to act in the donor's best interests. This could be called into question if you make yourself a substantial gift.

Gen27

Thank you, playing devil's advocate here....so if he needs care in the future the council would do a background check on his previous finances not just his current situation?

And again just asking the question....you say called into question being a substantial gift.....is this from HMRC or some other body?

I'm not trying to swindle him, I'm just trying to get all the facts to let him know the situation. Trying to understand all the implications for him.

Jeremy535897

His estate looks to be within the nil rate band, and no doubt there will be nil rate unused from his deceased spouse. There are no tax implications of any significance. If he dies within seven years of the gift, the inheritance tax position will be as if he had never made the gift and the money was still in his estate. It may well be reduced by £6,000 for IHT purposes (two annual exemptions), if he's made no other gifts in the previous tax year, and won't make any other gifts in the current tax year.

If he does not need care at the moment, and is likely to have a pot of £300,000 available to pay for care, the likelihood of the £10,000 gift ever being considered as "deprivation of assets," should he run out of money in the future, is remote. That is a matter for a local council paying for care, not HMRC or anyone else.

There is a risk that he could, for example, have a bad fall in the next month and need full time nursing care, which is very expensive. Whether £10,000 would make much difference is debatable, but who can say?

I would recommend that he makes the gift to you, and evidences it in writing, rather than you transfer the money using the LPA. As has been said, there is a duty to use the LPA for the benefit of the donor, and gifts aren't normally for their benefit.

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/comment/81971201#Comment_81971201

In which case, every financial decision you make using his funds has to be in the best interests of your Uncle and for his benefit.

It is difficult to see how a gift to you meets that obligation.

Don't do this gift.

elsien

I think people are getting confused with the LPA.

While the uncle is still of sound mind, any support from the LPA is merely carrying out his instructions, whether the decisions are wise or not. Best interest only comes in if he loses capacity.

Having said that accepting a 10 K gift when you are and will be supporting with his finances in the future is a potential conflict of interest, could raise questions, and personally, I wouldn’t go there.

As above he does also need to be aware of the potential deprivation of assets issue if he needs more care, given his age.

Keep_pedalling

I can’t see a problem as long as uncle has the mental capacity to make the decision. I also don’t see this as deprivation of assets as we are only talking about a small percentage of his total assets. If the OPs uncle wants to do this then he should document the gift for the benefit of his executors.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/81971541#Comment_81971541

Perhaps involve someone else/family member, so he can make it clear to them, it is a gift he wants to make and is not being pressured in any way. This could help if anybody ever questioned the situation.

sheslookinhot

A very generous uncle to his niece. Go ahead and let him pay for your roof repairs, as is his wish.