My mum just announced she wants to give me some money as she is worried that she might lose it all in the future due to care home fees. Who do I speak to about the implications of this sort of thing, an accountant, a solicitor a financial adviser? I have no idea how much but she wouldnt be troubling the inheritance tax threshold. When my old man died a few years ago I got half the house, I will have to pay capital gains tax on that if/when I see the money AFAIK, but not losing itvall on care home fees seems to be her biggest worry.
Any tips appreciated
PS I already have the coke and hookers lined up!!
Money advice service is a great place to start.
£3k a year (total) gift is ok. Above that it's a sliding scale based on how long the giver survives.
If the estate is substantial then a financial planner is worthwhile.
My parents seem oblivious to this. They are pretty well off with a house worth almost 900k but despite subtle hints seem reluctant to try to negate inheritance tax/care home fees.
My wife's parents are the complete opposite.
Money advice service is a great place to start.
£3k a year (total) gift is ok. Above that it’s a sliding scale based on how long the giver survives.
Could be wrong, but this is nothing to do with what the OP was asking.
OP. Just search for "deprivation of assets" on google
I have no idea how much but she wouldnt be troubling the inheritance tax threshold.
In that case the only constraint I'm aware of is the potential clawback if it's considered that she gave you the money to avoid care home fees. Some info in the link:
https://www.thisismoney.co.uk/money/experts/article-2384774/Are-parents-avoiding-care-home-fees-gifting-45-000.html
Possibly not a good idea to post that as the reason on a public forum...
They are pretty well off with a house worth almost 900k but despite subtle hints seem reluctant to try to negate inheritance tax/care home fees.
Perhaps they've spent ten seconds on Google and realised that you won't pay a penny of IHT on that £900k.
Or perhaps they think that a bit if tax is a good thing👿
IHT and care home fees are two entirely unrelated issues. For IHT there is 3k and the 7 year sliding scale for larger gifts. For care home fees the deprivation of assets powers are rather more far-reaching (and AIUI a council matter rather than HMRC so implementation may vary locally). Disclaimer I’ve haven’t had any personal acquaintance with the latter but have dealt with the former.
Your other may gift anything out of her income if it does not affect her day to day living, e.g. earn 30k, spend 15k, she could gift 15kpa in recurring type gifts, e.g., uni fees, kids pension etc, and the gifted money is straight out of the estate.
The 3k pa gift allowance is correct, also things like 5k for weddings.
're care home fees you just pay the difference between income and cost, so say fees are 30k pa, her income say 20k, that's 10k pa shortfall. You either pay it in cash, or take a charge on the house, or sell the house.
Once your mother's estate drops to 24k the state start paying the shortfall, but also choose the home.
Hope it helps, just keep a note of gifts. They are referred to potentially exempt gifts, or something similar, as they are potentially exempt from iht but hve yet to run their course.
Be realistic about longevity, look at your grandparents life length. 5 years in a care home for a lady is average, so keep tht in mind.
Be realistic about longevity, look at your grandparents life length. 5 years in a care home for a lady is average, so keep tht in mind.
My old next door neighbour sold her house to an insurance company for 24hr care for the rest of her life. She lived till 101 (sold it at 80), one of the few times the good guys win
Are your folks (or your mother anyway) sure they're not going to need to go into a care or nursing home?
When i worked for a ftse 100 company, a top 5 with 100s of thousands of employees, the pension admin guys used to say 30% of pension claimants died within 12 months, 30% c avg mortality ages, and the last third went on to by definition late 90s.
To get an idea of expected mortality get a life insurance quote, my mother got one last year, aged 88, wanting extra 50k life cover...premium was 40k pa. So effectively 80% chance of departing this year.
My parents seem oblivious to this. They are pretty well off with a house worth almost 900k but despite subtle hints seem reluctant to try to negate inheritance tax/care home fees.
Its like banging your head against a brick wall isn't, wife's parents are the same and its so frustrating.
They are way way way off from being financially savvy yet are financially well off, basically they're super tight and been lucky with inheritances (rich farmer heritage) or been given money over the years from their elder relatives.
Loads of cash sitting around in rubbish savings accounts, yet come the day it'll be slapped with IHT because they wont have done anything to minimise it and nor reciprocated what they benefited from by passing it down to their children as they had done to them. We borrowed a few grand for various things like deposits, always wanted it paid back yet they were given money themselves for the same thing. [facepalm]
Larry - sounds like it's because they didn't work to earn it. If they did they would know how hard it was to earn, so to pass it on free of tax. Inherited money can be like a lottery win, they did nothing to work for it so not bothered about paying tax on it.
I know similar people and formed the above opinion based on that.
Also, the default position with wealth is to do nothing, die and pay iht. That person has not had to reveal to his kids that despite being really careful with his money, he s actually minted and had 200k in his current account....dont ask me how I know.i know a few people who fit the description. The kids went mad.
She can gift an annual £3000 with no implications. If she hasn’t already gifted last year you can go back a year and gift £6k this tax year.
Deprivation of assets can vary from council to council. You don’t say how old your mother is but if she’s in reasonable health and in her 60’s or early 70’s then you’d probably get away with it. Late 70’s or 80’s probably less so.
Many people overlook the ability to gift out of excess income which is immediately out of her estate and within the rules. Effectively, if your moms income is say, £30k, but lives on £20k, she can gift the excess £10k with no issues. There are hmrc forms available to document this.
I’ve had clients who’ve bought funeral plans to remove the money from the estate now, rather than at a later date.
From an investment point of view you can put money into life assurance bonds which, as they are classed as life assurance under local authority rules, they don’t count towards the estate calculation (before deprivation of asset rules again depending on age/health etc).
The house has already been half passed to you which is a trick many people miss so you’re already ahead of the game compared to most.
If it’s a few tens of thousands you’re realistically unlikely to run into trouble. If it’s substantial sums them more likely to arise the suspicions of the council should care be required (and despite what most people assume, only a very small percentage of the elderly end up in long term care for a substantial period).
How much more than £1m could people possibly want as an inheritance?
Are your folks (or your mother anyway) sure they’re not going to need to go into a care or nursing home?
No, but I wasnt intending to spend the money anyway.
You don’t say how old your mother is but if she’s in reasonable health and in her 60’s or early 70’s then you’d probably get away with it.
If it’s a few tens of thousands you’re realistically unlikely to run into trouble
Both of these, the 3K per year would do it I reckon although, realisticaly I have clue what shes got.
Would I be liable to tax on all this?
How much more than £1m could people possibly want as an inheritance?
Want???? ****ing loads please. Get, much less than that!
The house has already been half passed to you which is a trick many people miss so you’re already ahead of the game compared to most.
Incorrect. In what way is he ahead compared to most?
You're giving completely incorrect out of date information. There is no IHT advantage in half a married couple gifting half their house to their kids on their death (unless they are absolutely loaded, which he has already said they are not)
Both of these, the 3K per year would do it I reckon although, realisticaly I have clue what shes got.
Would I be liable to tax on all this?
Unless the assets and house are worth more than a million you'll pay **** all inheritance tax.
The only likely way you'll pay anything is if you follow MrTall's advice and pay a solicitor thousands to set up some pointless trust arrangement to pass on half the house to a kid on one parties death and then another fat wad of cash to another solicitor to unpick the deed afterwards to try to repair the damage. Or alternatively don't use a trust arrangement, just give half the house to the kids and then watch the income tax man come knocking for the rental income...
Since nobody has asked I will.
Have either of you considered what you get paying for a care home vs where you get put when you're not? Food for thought.
Unless the assets and house are worth more than a million you’ll pay **** all inheritance tax.
I established that in my opening post.
I'm talking about my mum giving me some money as she's Worried about it all going in care home fees.
Have either of you considered what you get paying for a care home vs where you get put when you’re not? Food for thought.
Yep, I wasnt planning on spending the money anyway.
Clearly we need advice on all this so my main question is what sort of person to talk to? Financial adviser?
Probably, I'd also be finding out how much care costs and how to plan for that.
The generalist, the OP has stated the main reason behind the move to gift money is to avoid losing cash/assets to pay for long term care, which gifting half the house on first death does exactly that as ‘half a house’ can’t be sold to fund care costs so takes the property (most people’s largest asset) out of the remit of the council to assess care funding options.
I never said it would have anything to do with avoiding IHT which isn’t a problem for most married people with kids as the threshold is £1m which is more than enough for most.
OP, there is no tax on what your mother gifts to you, it’s just a potentially exempt transfer that there could be future IHT on if you’ve underestimated the value of your moms estate (her threshold will be lower than the £1m as you’ve already received some of your fathers allowance).
I don’t really think you need to speak to a solicitor or an IFA unless there is an IHT issue which it doesn’t sound like it is. If annual gifting will achieve what she wants then It’s all pretty straightforward.
Mrtall.
Well said. I sit corrected.
You can just log the gifts on a piece of paper and do bank transfers as a back up. We were all sat in a solicitors office, my mum got out this scrap of paper she had written the gifts on. The solicitors face said it all.
Care home fees in the nw are c 26k pa residential care, 30k nursing. You just fund the shortfall and can claim all allowances,pension etc. If you cannot pay now the home can take a charge on the house and charge you 3% interest, it is regulated.
There are hybrid solutions, like your mum living say a week in respite care, then 3 at home, then a week respite. Some people slot straight into care home life, usually ladies, men cannot face being controlled.
Hope it all works out.