Gifting money from MIL in care home - POA
BeatTheSystem
Posts: 156 Forumite
My wife and I have Financial & Health/Welfare POA's for my wife's 86 year old mother.
She has moderate to advanced dementia and resides in a care home.
Her income is 32K pa (pensions, AA, interest, dividends)
Her outgoings, mostly care home fees are 35K pa.
She has assets of £700K in low/medium risk investment portfolio / cash / modest house. We are selling the house as we dont want the hassle of upkeep or bother of renting it out.
She has unused nil rate band from her late husband.
We are not sure how long she will live but we have to assume a long time, say 10 years, she has had dementia for at least 5.
The question is that we would like to avoid IHT by keeping her assets at 650K. We would like to gift 50K from her assets to our children.
Clearly she has more than enough assets to pay for care for some time to come.
Has anybody any experience of this?
Thank you.
She has moderate to advanced dementia and resides in a care home.
Her income is 32K pa (pensions, AA, interest, dividends)
Her outgoings, mostly care home fees are 35K pa.
She has assets of £700K in low/medium risk investment portfolio / cash / modest house. We are selling the house as we dont want the hassle of upkeep or bother of renting it out.
She has unused nil rate band from her late husband.
We are not sure how long she will live but we have to assume a long time, say 10 years, she has had dementia for at least 5.
The question is that we would like to avoid IHT by keeping her assets at 650K. We would like to gift 50K from her assets to our children.
Clearly she has more than enough assets to pay for care for some time to come.
Has anybody any experience of this?
Thank you.
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Comments
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I don't know the answer, but my thoughts are twofold...
As an attorney you should:
Act in the best interest of the donor. (Keep the assets)
Act as a prudent person would do. (minimise IHT)
These two "rules" are sometimes incompatible and I don't know which trump's which in the circumstances you describe.
I'd be interested in the answer.How's it going, AKA, Nutwatch? - 12 month spends to date = 2.31% of current retirement "pot" (as at end March 2024)0 -
Others will give the details of the rules but I think she can gift £3k at a time and use last years £3k if she hasn't already done so.
PS In the meantime of course her pension will have gone up and £700k+ should be giving you £14k (less tax)Never pay on an estimated bill0 -
Surely only in the situation where there is previous evidence of gifting those sort of figures can the attorneys carry on the gifting.
Gifting will not be any benefit for the wife's mother but will only help the estate after her death.
I would therefore say that the answer is a clear no due to no benefit0 -
I cannot see how giving away her assets to reduce IHT is in her best interests. It is clearly in the interests of the beneficiaries but an Attorney has no authority to do this. The Office of the Public Guardian agrees with me - see page 23 of https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/287864/EPA101_Guidance_apply_register_EPA.pdf. If you want to make a one-off large gift from the donors assets, for example for IHT purposes, the permission of the Court of Protection is required.1
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I cannot see how giving away her assets to reduce IHT is in her best interests. It is clearly in the interests of the beneficiaries but an Attorney has no authority to do this. The Office of the Public Guardian agrees with me - see page 23 of https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/287864/EPA101_Guidance_apply_register_EPA.pdf. If you want to make a one-off large gift from the donors assets, for example for IHT purposes, the permission of the Court of Protection is required.
Thank you for the link and quoting the relevant part. I will write to the court of protection with our query.
I take your (and others) point that there is no benefit to her but there is no harm done either
If she was of sound mind she would approve of measures to reduce tax and help her grand children. With the benefit of hindsight it would have perhaps been a good idea if she had written down her thoughts on matters like this when she was of sound mind.
We will see what happens. When I find out I will update this thread.
Thank you0 -
It is an absolute no no, you cannot make any such gifts, not even the annual £3000 allowance unless she was in the habit of doing that while she still had the capacity.
In any case it seems you have not taken in account of her residential nil rate band, which is also can be transferred from her husband, so her estate will not be subject to IHT anyway.
£35k pa seems very low for care home costs so a better use of her money might be on a better care home.0 -
Genuine question...
If there would be no IHT to pay, and she's guaranteed not to run out of money for care....who's going to know, or care, where her money went? Who stands to currently inherit? Any other family that would come out of the woodwork and cause a fuss?
(I'm not for one minute saying this is the right thing to do)How's it going, AKA, Nutwatch? - 12 month spends to date = 2.31% of current retirement "pot" (as at end March 2024)0 -
Genuine question...
If there would be no IHT to pay, and she's guaranteed not to run out of money for care....who's going to know, or care, where her money went? Who stands to currently inherit? Any other family that would come out of the woodwork and cause a fuss?
(I'm not for one minute saying this is the right thing to do)
Seems a dangerous line to cross, couldnt similar things be said about other petty crime, or fraud, parking offences etc etc. In my view the boundaries of POA have to be absolute and clear as the opportunities and incentives for an attorney to use their privileged position to benefit themselves are just too tempting. In difficult cases the Curt of Protection has the authority to make a judgement.0 -
Seems a dangerous line to cross, couldnt similar things be said about other petty crime, or fraud, parking offences etc etc. In my view the boundaries of POA have to be absolute and clear as the opportunities and incentives for an attorney to use their privileged position to benefit themselves are just too tempting. In difficult cases the Curt of Protection has the authority to make a judgement.
I do agree and since its not my money I would not do anything without being sure its OK and it seems the opinion on this sounding board is that its not, without the court of protections approval nothing will happen.
I am curious to see if its possible. My MIL and FIL lived prudent lives and saved well. My MIL is self funding whilst many of the other residents are being funded by the local authority, so in my tiny little mind I feel it justified to save tax - eventually, but not at the risk of her welfare needs. I imagine there is a level of assets where the court of protection would sanction tax saving measures, for example if someone had 10M and their costs per year were 50K p/a they would have to be in the home for 200 years before running out of money (rough calculation). I just dont know what that level is.
My motive is about the principle of minimising tax, a life long habit. My wife and I are fortunately very wealthy and do not need the money in case anyone is wondering.0 -
Keep_pedalling wrote: »It is an absolute no no, you cannot make any such gifts, not even the annual £3000 allowance unless she was in the habit of doing that while she still had the capacity.
In any case it seems you have not taken in account of her residential nil rate band, which is also can be transferred from her husband, so her estate will not be subject to IHT anyway.
£35k pa seems very low for care home costs so a better use of her money might be on a better care home.
35K pa is the going rate. This is what the Local Authority pays, we negotiated the same, sometimes private payers pay more than the LA rate.
re nil rate bands. I admit my knowledge is not clear on this concerning the recent changes and need to look into this, are you saying that if we retain her property then the IHT limit will be increased? Her husband died 7 years ago.
If so then probably the safest thing to do as an attorney is to keep the property.0
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