Mum gifting half of money from downsizing

and doesn't want the state to get it if she needs care

2 bit of advice.


Firstly there are rules in place to stop your mother giving away her assets to get state benefits. It's called "deliberate deprivation of assets" (that's not a moral judgment on my part, that's the proper name so you can google/research further).
If she did need state benefits and the LA decide this was done deliberately then thy can roll back the transaction. There is no time limit for this.
House transactions are very traceable.
If your mother were on the other hand to give you a few £ks in generous Xmas/birthday/anniversary presents then that would possibly be less traceable and might not fall into the realms of deliberate deprivation.
Bit of a grey area, but it's certainly ok to give gifts.
I'm a little suprised neither solicitor has mentioned this but I guess it depends on the extent of your chats.


Secondly I've been involved in visiting many care homes recently (about 20) and some the local authority ones fall under the category of OverMyDeadBody. Let's call then OverMyDeadBody grove.
I mean people being cold (and unable to get themselves a jumper/blanket), stench or urine, dressings hanging off, filthy toilets.


We also had the experience of the LA trying to put my FIL in a different home to MIL after 60 years of marriage to save money (with suggestions at every possible opportunity that family could pay). We fought and won, but the point is they might not put your mum somewhere convenient for her children/grandchildren/siblings to visit.



So lets suppose the transaction doesn't get picked up as deliberate deprivation. Do you want her in OverMyDeadBody Grove, miles away from her children/grandchildren? - as that is often what is offered by the local authority.

If your mother lives in the house rent free it will still count as hers for IHT with no 7 year time limit and you will be liable to CGT on any gain over market value during your ownership.

Seems to me that giving you her money and putting her new home in your name is unnecessarily risky for her ....

What happens if the house has to be sold? eg:
- you go bankrupt
- you divorce and the capital from her house is needed for the divorce split
- you die
- you need state benefits but the house is regarded as one of your assets?
Is Mum out on the streets?

Will you charge her a commercial rent for living in your house? If not and you bought the house with her money it could be regarded as a "Gift with Reservation" and so included in her estate for IHT purposes.

If she needs to go into care the council could regard the gift as "deprivation of assets" and so included in her assets for calculation of the councils contribution to her care.

If she keeps her money she has much more freedom as to how it is spent should she need support. eg she may want to spend it on care of her choice at home rather than in a care home. She also would have more choice if she does have to go into a care home. The majority of old people do not go into a care home.

Note that the state doesnt take the money if one does need to go into care. Rather, the council use the amount of assets someone owns to determine how much they are prepared to pay for as benefits - its a means test. It is then up to the person concerned or their representative to make whatever arrangements are needed to pay for the rest.

Giving away ones money to gain from council payment of care costs does not seem very different to me to stopping working and giving away ones home to claim housing benefit.

So I strongly suggest she doesnt do it. She should use her money for her own needs and only if there is any left over should it go the to her beneficiaries.

lisyloo wrote: »

note that should she require care in her own home, then the value of her residence will not count towards the means test (ive done it twice).

its a lot easier these days for people to remain in their own homes (and often cheaper) as we now have a variety of tech options which can help keep people safe

Between the shortage of care home places and the council's unwillingness to pay, most people will stay in their own homes far longer than before - whether that's the best solution for them or not.

I'd rather have my own capital so that I can chose the best option for me if that time comes.

Also, my mother wants me to have the house in full when she does pass away (she's in good health currently) and doesn't want the state to get it if she needs care, so suggested we put the new place in my name. It will still be her home and I will continue to live in another house I rent elsewhere.

https://www.aprilking.co.uk/2017/01/30/deprivation-of-assets-guide/

For the Local Authority to take action, they would need to show that your intention at the time of disposal was to exclude the property from means testing to avoid care fees.

Your mother is 77. She is fit and well and may remain so but the strong possibility is that care/assistance in the years to come will be required

She remains in the house which she has bought with her money but gifts the property to you - what would the man in the street (let alone the LA/Appeal judge) make of this do you think?

I was fortunate to inherit my late father's property 10 years ago (no mortgage) in Wales which I rent out

Fortunate indeed - and you now propose that taxpayers who may be in a far less fortunate situation than you are should pay the cost of your mother's care while you increase your assets at their expense?

The greed that passeth all understanding?:eek: