Care Home financial advice reqd.

[Druk]

The story so far...

Mother is in a care home (in England...so their rules apply) and is currently 'fully funded'. This situation may/is likely to change come the next revue in Sept.

Her current financial state is that all her assets are in cash, over which I have LPOA. There are insufficient funds to qualify for Inheritance Tax, nevertheless there is a substantial amount available to the Local Authority should they decide she is to self-fund.

Last week, and over the phone, I was given ad-hoc advice that (all) her descendants are each able to receive from her a yearly gift to the value of £xxxx without that amount being questioned by the LA under the 'Deprivation of Assets' rules. The 'ad-hoc' advice came from a bona-fide legal outfit who were touting for further business at a local market.

This xxxx amount struck me as rather large and as LPOA it would fall to me to pay out this amount, but also I would be then liable to refund the LA if it transpired that the xxxx was wrong. There are presently seven beneficiaries so the annual total sum would fall into the five figure bracket.

I realise it's not on to ask on here for financial advice but does anyone have any experience of this situation and who or where to ask if the xxxx amount is correct. Search as I may I can find nothing helpful on-line.

Thanks.






.

 

[renault12ts]

Deprivation of assets | Home and Care | Age UK

 

[Druk]

Deprivation of assets | Home and Care | Age UK

Yes, thanks. However there must be a allowance by which the LA permit gifts to be given for Birthdays, Christmas etc, etc, and a top limit to these gifts. It's this I'm trying to determine.

 

[Steveml63]

Hi,
Surely the gift rules for LA must fall in line with the HMRC rules?
https://www.gov.uk/inheritance-tax/gifts

Cheers
Steve

 

[KennyN]

Yes, thanks. However there must be a allowance by which the LA permit gifts to be given for Birthdays, Christmas etc, etc, and a top limit to these gifts. It's this I'm trying to determine.

I dont know if it is a LA matter , more of a DWP / Tax matter.

Acting of the advice of my mums lawyer it is £3k per person / pa without effecting their tax etc., in Scotland whether it is different to England ??

Since my dad passed away my mum "gifts" us £6k every December , the wife and i have a joint account so the 2 x £3k = the gift amount. This has been the case for over four years now and there has never been any issues.

My mum still lives in her own house so whether being in care makes any difference i wouldnt know.

Kenny

 

[renault12ts]

Hi,
Surely the gift rules for LA must fall in line with the HMRC rules?
https://www.gov.uk/inheritance-tax/gifts

Cheers
Steve

Inheritance tax rules are stand alone.

Often people talk about the "7 year rule" in respect to care homes etc...they are mixing legislations, the 7 year rule is only a an IHT rule.

IHT allows £100s of thousands of relief...LA rules with regard to care homes are tiny.

 

[renault12ts]

I dont know if it is a LA matter , more of a DWP / Tax matter.

Acting of the advice of my mums lawyer it is £3k per person / pa without effecting their tax etc., in Scotland whether it is different to England ??

Since my dad passed away my mum "gifts" us £6k every December , the wife and i have a joint account so the 2 x £3k = the gift amount. This has been the case for over four years now and there has never been any issues.

My mum still lives in her own house so whether being in care makes any difference i wouldnt know.

Kenny

The rules you are stating are also only to do with IHT and will bear no relation to care homes...unless it is decided that these gifts are deprivation due to the fact that although your mother is still in her home she may need to go into a home...and you are or could be assumed to be aware of this.

 

[Druk]

Hi,
Surely the gift rules for LA must fall in line with the HMRC rules?
https://www.gov.uk/inheritance-tax/gifts

Cheers
Steve

I dont know if it is a LA matter , more of a DWP / Tax matter.

Acting of the advice of my mums lawyer it is £3k per person / pa without effecting their tax etc., in Scotland whether it is different to England ??

Since my dad passed away my mum "gifts" us £6k every December , the wife and i have a joint account so the 2 x £3k = the gift amount. This has been the case for over four years now and there has never been any issues.

My mum still lives in her own house so whether being in care makes any difference i wouldnt know.

Kenny

It is a LA (Local Authority) matter because it will be them that decides on future funding and if it becomes that mum stops receiving LA funding it's them that oversees the denuding of funds from her account to pay for her care. It seems likely that the advice I was given was entirely wrong and was based on the Inheritance Tax rules which don't apply to care home fees in any way.

Kenny. Should your mum become dementia stricken in later years and need LA paid-for care it could work in your favour to show that she historically gave you £6K every Christmas and that those gifts should continue...but my circumstances are not as clearly defined as that.

 

[spinaltap]

My Mother-in-Law only passed-away in May this year...

While she was in care (dementia), her sizeable cash assets were deposited in a bond - the interest from this was used to pay for her care.

Even though she had a formal Will, on her death the assets were still subject to Probate (which surprised me).

Regarding annual 'cash' gifts, the family took advice from the family lawyer and acted accordingly.

 

[LTD]

Derek I think you would be best to speak with a lawyer in the area of England concerned.

They will have a better understanding of what limit should apply and their letter stating this will be well worth paying for.

 

[Rory]

Even though she had a formal Will, on her death the assets were still subject to Probate (which surprised me).

I don't know if a Will makes a difference either way, but basically probate is needed unless all assets are joint owned and money is less than £5000.

 

[Druk]

I don't know if a Will makes a difference either way, but basically probate is needed unless all assets are joint owned and money is less than £5000.

I thought probate was only mandatory if there was property involved? For a cash only will the executor could act on his own as long as he obeyed the letter of the will. If there are already lawyers involved it would be in their interest to enact probate but I'm not sure it's mandatory.

 

[ringway]

AGE UK. LINK.

UK CARE GUIDE. LINK.

BBC. LINK.

There's also a couple of threads on Pepipoo. Start your own thread on there, Derek. Those guys like getting stuck into anything.

 

[Rory]

I thought probate was only mandatory if there was property involved? For a cash only will the executor could act on his own as long as he obeyed the letter of the will. If there are already lawyers involved it would be in their interest to enact probate but I'm not sure it's mandatory.

Sorry - I didn't mean literally cash, I meant money in banks etc. I don't think the Government sets a specific limit, but various sources suggest it's £5000. You'll generally need a Grant of Probate before banks etc will release money to you.

Noting you're in Scotland - it might be different there.

 

[Rory]

You'll generally need a Grant of Probate before banks etc will release money to you.

Sorry to reply to my own post, but I stumbled across an article which suggests that banks have increased the amounts they'll release without Probate and some don't have fixed limits and look at each case on their merits.

So it may be that Probate isn't necessary. Certainly worth avoiding if possible, as it's a bit of a faff.

 

[Druk]

Possibly, when mum passes on, as we do, the bank won't get to hear about it till the money is somewhere else. What with me having POA and all

 

[zipdip]

Well as you know the amount allowed to be kept in England is £23,400 below that the council has to pay care homes fees,what offsets these fees is any benefits the lady gets and of course her pension,if she has a number of benefits it can bring the cost of a care home down to about £200 a week,she is allowed to keep £30 of her pension to spend,with regard money given as presents we allowed £300x4 for birthdays and christmas and nothing was said,my partners mother is now fully funded by the local council as she has reached the bottom cash limit,one thing I would say is if anybody may be facing this problem in the future, is to contact the council and get them to look at the benefits the aged person is getting,I was surprised just what she could get extra which all helped to pay care home fees,but as my partners mother has been in a home for 10 years we have reached the bottom cash limit

 

[Druk]

Well as you know the amount allowed to be kept in England is £23,400 below that the council has to pay care homes fees,what offsets these fees is any benefits the lady gets and of course her pension,if she has a number of benefits it can bring the cost of a care home down to about £200 a week,she is allowed to keep £30 of her pension to spend,with regard money given as presents we allowed £300x4 for birthdays and christmas and nothing was said,my partners mother is now fully funded by the local council as she has reached the bottom cash limit,one thing I would say is if anybody may be facing this problem in the future, is to contact the council and get them to look at the benefits the aged person is getting,I was surprised just what she could get extra which all helped to pay care home fees,but as my partners mother has been in a home for 10 years we have reached the bottom cash limit

Helpful post . Is that 300x4 for birthdays and 300x4 for Christmas or 300x4 PA?

 

[zipdip]

We did it for birthdays and christmas so 8 payments of £300

 

[Rory]

Possibly, when mum passes on, as we do, the bank won't get to hear about it till the money is somewhere else. What with me having POA and all

Well POA ceases on death, and the bank will see the date if they see the death certificate.

I guess if it's a few £K and it's coming your way anyway then it doesn't matter, but it's not something I'd do.