Mum gives me her house, how to deal with care costs later on
Discussion
"Homeowners are being warned to tread carefully before signing up to any scheme that claims to protect their home from being sold if they need to go into care. These schemes are aimed at sheltering homes from being included when a local authority assesses an elderly person's assets to determine how much they should contribute to their care fees.
"Janet Davies, from the care fees planning service Symponia, says local authorities are increasingly employing ''avoidance officers'' to ensure that residents are not using these trusts to wriggle out of care fees. "This activity is bound to increase because money is tight," she said.
"The Government could either ban so-called 'settlor-interested' trusts (where the person who set up the trust is also a beneficiary), or instruct local authorities to ignore them, so they can't be used to avoid care home fees. He said local authorities will begin to look more closely at these products because care costs are rising so fast.
"Janet Davies added that products that purport to avoid fees could end up being the next mis-selling scandal, because when they are sold in isolation they often do not meet the family's overall needs.
"Chris Belcher, chairman of Solicitors for the Elderly, says the legislation around this is "difficult". However, he added: "If you do this at a stage of life when you are about to go into a care home, and have made several visits, and then you decide to put your home into a trust, you are more likely to fall foul of deliberate deprivation than if you are 60, hale and healthy and set the trust up to pass on your home to your grandchildren."
"While local authorities have frequently turned a blind eye to this measure in the past, new rules surrounding how we pay for care were announced in February, and it is likely that attempts to shield wealth will be more heavily scrutinised. Lawyers who sell these products could even have their files called as evidence when the local authority makes its funding decision.
"If it finds that you have set up the scheme deliberately to deprive yourself of assets to pay for care, your home will be included in the means-testing equation anyway, and the thousands of pounds that you have paid to set up the trust will have been wasted."
http://www.telegraph.co.uk/finance/personalfinance...
"Janet Davies, from the care fees planning service Symponia, says local authorities are increasingly employing ''avoidance officers'' to ensure that residents are not using these trusts to wriggle out of care fees. "This activity is bound to increase because money is tight," she said.
"The Government could either ban so-called 'settlor-interested' trusts (where the person who set up the trust is also a beneficiary), or instruct local authorities to ignore them, so they can't be used to avoid care home fees. He said local authorities will begin to look more closely at these products because care costs are rising so fast.
"Janet Davies added that products that purport to avoid fees could end up being the next mis-selling scandal, because when they are sold in isolation they often do not meet the family's overall needs.
"Chris Belcher, chairman of Solicitors for the Elderly, says the legislation around this is "difficult". However, he added: "If you do this at a stage of life when you are about to go into a care home, and have made several visits, and then you decide to put your home into a trust, you are more likely to fall foul of deliberate deprivation than if you are 60, hale and healthy and set the trust up to pass on your home to your grandchildren."
"While local authorities have frequently turned a blind eye to this measure in the past, new rules surrounding how we pay for care were announced in February, and it is likely that attempts to shield wealth will be more heavily scrutinised. Lawyers who sell these products could even have their files called as evidence when the local authority makes its funding decision.
"If it finds that you have set up the scheme deliberately to deprive yourself of assets to pay for care, your home will be included in the means-testing equation anyway, and the thousands of pounds that you have paid to set up the trust will have been wasted."
http://www.telegraph.co.uk/finance/personalfinance...
When it comes to potentially paying care home fees then if any dependent spouse or dependent relative is living in the property, then it is disregarded.
If she has assets, including the house, of more than £23,250, then she will have to pay all her fees, or you will have to find the money for her.
If she tries to give away savings/the house just before going into care this will be deemed “deliberate deprivation of assets”, and will fail.
However, she can make small gifts as part of legitimate inheritance tax (IHT) planning. This would allow her to dispose of £3,000 annually (and this sum can be carried forward for a year if unused). She is also allowed to make unlimited annual gifts of £250, and can make special wedding gifts to a child of £5,000, to a grandchild of £2,500 or £1,000 to anyone else.
If she has already begun making larger gifts, under the IHT potentially exempt transfers rules, then these may be disregarded, because if you have already started a pattern of giving, councils should accept this as legitimate planning. These remove from an estate property given away seven years before you die.
If she were to make an outright gift of the house to you in a bid to reduce the value of the estate, it would be treated as a “potentially exempt transfer” for the purposes of IHT. If she were to die within seven years of gifting, then the property would fall back into her estate for IHT purposes. If, however, she were to survive for seven years after making the gift, there would be no IHT bill. That said, having given the property as an outright gift, this means she is giving up any right to receive rental income or a share in the proceeds.
If she signs over the house but remain living in the property, this would then be treated as a “gift with reservation of benefit.” According to tax rules, the house will then remain part of her estate on her death, even if she lives beyond seven years; and could be counted as capital if it came to care home fees.
If she has assets, including the house, of more than £23,250, then she will have to pay all her fees, or you will have to find the money for her.
If she tries to give away savings/the house just before going into care this will be deemed “deliberate deprivation of assets”, and will fail.
However, she can make small gifts as part of legitimate inheritance tax (IHT) planning. This would allow her to dispose of £3,000 annually (and this sum can be carried forward for a year if unused). She is also allowed to make unlimited annual gifts of £250, and can make special wedding gifts to a child of £5,000, to a grandchild of £2,500 or £1,000 to anyone else.
If she has already begun making larger gifts, under the IHT potentially exempt transfers rules, then these may be disregarded, because if you have already started a pattern of giving, councils should accept this as legitimate planning. These remove from an estate property given away seven years before you die.
If she were to make an outright gift of the house to you in a bid to reduce the value of the estate, it would be treated as a “potentially exempt transfer” for the purposes of IHT. If she were to die within seven years of gifting, then the property would fall back into her estate for IHT purposes. If, however, she were to survive for seven years after making the gift, there would be no IHT bill. That said, having given the property as an outright gift, this means she is giving up any right to receive rental income or a share in the proceeds.
If she signs over the house but remain living in the property, this would then be treated as a “gift with reservation of benefit.” According to tax rules, the house will then remain part of her estate on her death, even if she lives beyond seven years; and could be counted as capital if it came to care home fees.
Jockman said:
Grandad Gaz said:
The incentive to actually go out to work these days is getting less and less...
And yet we have record levels of employment. Bizarre.Royal Mail can't make any money delivering parcels through their traditional workforce yet Amazon can operate a new independent delivery network 7 days a week. Amazon seems to be staffed by drivers who can barely speak English but know how to follow a sat-nav. Similarly my local Tesco is open 24/7 while the NHS is struggling to open at the weekend.
I suspect the "new jobs" are being done by "new people", while the lower end of traditional UK society continues unchanged.
Social Services are not tax inspectors. Care home fees aren't a tax. Social Services are only interested if a person owned a property within X years, that being 2 in my area. Trusts, plans and fancy legal agreements don't come into it, it's just a simple question on a form that has to be answered correctly. I believe X is different across the country it may be 5 in other areas.
This thread has become overly complicated, and one thing is for sure - don't take out care home insurance it's a con
This thread has become overly complicated, and one thing is for sure - don't take out care home insurance it's a con
Jockman said:
mph1977 said:
Jockman said:
Sheepshanks said:
Jockman said:
In reality many families take the council contribution and add their own contribution to it.
When you say "many" - is there any way of quantifying that, even in percentage terms?It strikes me that very few families eligible for the council to pick up the tab, would be the sort of families able to afford the uplift from the council rates to that of a good quality private home.
The council contribution (IIRC in the £500/wk range) to the typical decent private home cost (more like a £1000/wk) for, potentially, many years. My Mum has been in a couple of homes for coming up to 10yrs now.
As for % I could not say. The people I know or deal with tend to be richer than their parents.
When I was running Sheltered Schemes (different kettle of fish) the amount of self-funders was in the region of 25% with the rest on state support.
there;s also the distortion of the the private sheltered / extra cares that are leaseholds rather than rented in attraxting those who have owned a property (based on the on sale ofthe lease and/or the return of the investment bond things)
Ozzie Osmond said:
Jockman said:
Grandad Gaz said:
The incentive to actually go out to work these days is getting less and less...
And yet we have record levels of employment. Bizarre.Royal Mail can't make any money delivering parcels through their traditional workforce yet Amazon can operate a new independent delivery network 7 days a week. Amazon seems to be staffed by drivers who can barely speak English but know how to follow a sat-nav. Similarly my local Tesco is open 24/7 while the NHS is struggling to open at the weekend.
I suspect the "new jobs" are being done by "new people", while the lower end of traditional UK society continues unchanged.
ali_kat said:
When it comes to potentially paying care home fees then if any dependent spouse or dependent relative is living in the property, then it is disregarded.
Can you elaborate on this, mainly the definition of 'dependent'. My grandfather-in-law recently had to move to a care home, currently his son is living in the house, he's in his 50's and has always lived there and for the past few months due to ill health he's not working.SunsetZed said:
ali_kat said:
When it comes to potentially paying care home fees then if any dependent spouse or dependent relative is living in the property, then it is disregarded.
Can you elaborate on this, mainly the definition of 'dependent'. My grandfather-in-law recently had to move to a care home, currently his son is living in the house, he's in his 50's and has always lived there and for the past few months due to ill health he's not working.ali_kat said:
SunsetZed said:
ali_kat said:
When it comes to potentially paying care home fees then if any dependent spouse or dependent relative is living in the property, then it is disregarded.
Can you elaborate on this, mainly the definition of 'dependent'. My grandfather-in-law recently had to move to a care home, currently his son is living in the house, he's in his 50's and has always lived there and for the past few months due to ill health he's not working.swerni said:
Ozzie Osmond said:
Jockman said:
Grandad Gaz said:
The incentive to actually go out to work these days is getting less and less...
And yet we have record levels of employment. Bizarre.Royal Mail can't make any money delivering parcels through their traditional workforce yet Amazon can operate a new independent delivery network 7 days a week. Amazon seems to be staffed by drivers who can barely speak English but know how to follow a sat-nav. Similarly my local Tesco is open 24/7 while the NHS is struggling to open at the weekend.
I suspect the "new jobs" are being done by "new people", while the lower end of traditional UK society continues unchanged.
If you were able to start from fresh, your business model wouldn't look like RM.
The cost of the staffing is only a single factor.
still haven't worked out why the sorting staff in the national / international hubs need a full postman issue of uniform ... ( depot staff i can understand due to front counter / ad hoc van runs if they are the right grade / training ditto the people who are predominatly driving / delivering )
I've just seen this thread and clicked on the last page .....
..... I'm rather mystified (no I'm not - it's P.H.
) as to how
we've got from the thread title to postmen's uniforms
.
My 'friend's' situation was:
Mother sold family home, gifted her sons & their spouses the money, they bought a sheltered flat and allowed their mother to live in it rent free.
When the mother eventually needed to go into a home she obviously had held
no assets for a long time ..... Bingo!
Flat then sold using sons & spouses annual CGT allowances.
..... I'm rather mystified (no I'm not - it's P.H.
) as to howwe've got from the thread title to postmen's uniforms
.My 'friend's' situation was:
Mother sold family home, gifted her sons & their spouses the money, they bought a sheltered flat and allowed their mother to live in it rent free.
When the mother eventually needed to go into a home she obviously had held
no assets for a long time ..... Bingo!
Flat then sold using sons & spouses annual CGT allowances.
Elderly said:
Mother sold family home, gifted her sons & their spouses the money, they bought a sheltered flat and allowed their mother to live in it rent free.
Still likely to fall foul of IHT rules 
... and because of that, any "defence" that the house was gifted as part of IHT planning probably won't wash.Elderly said:
When the mother eventually needed to go into a home she obviously had held
no assets for a long time
What was "a long time"?no assets for a long time
Elderly said:
I've just seen this thread and clicked on the last page .....
..... I'm rather mystified (no I'm not - it's P.H.) as to how
we've got from the thread title to postmen's uniforms.
My 'friend's' situation was:
Mother sold family home, gifted her sons & their spouses the money, they bought a sheltered flat and allowed their mother to live in it rent free.
When the mother eventually needed to go into a home she obviously had held
no assets for a long time ..... Bingo!
Flat then sold using sons & spouses annual CGT allowances.
If you read the other pages you'll find a few people supporting your approach, some warning of genuine pitfalls in your approach and still others who find it completely immoral...... I'm rather mystified (no I'm not - it's P.H.
) as to howwe've got from the thread title to postmen's uniforms
.My 'friend's' situation was:
Mother sold family home, gifted her sons & their spouses the money, they bought a sheltered flat and allowed their mother to live in it rent free.
When the mother eventually needed to go into a home she obviously had held
no assets for a long time ..... Bingo!
Flat then sold using sons & spouses annual CGT allowances.
Jockman said:
Elderly said:
I've just seen this thread and clicked on the last page .....
..... I'm rather mystified (no I'm not - it's P.H.) as to how
we've got from the thread title to postmen's uniforms.
My 'friend's' situation was:
Mother sold family home, gifted her sons & their spouses the money, they bought a sheltered flat and allowed their mother to live in it rent free.
When the mother eventually needed to go into a home she obviously had held
no assets for a long time ..... Bingo!
Flat then sold using sons & spouses annual CGT allowances.
If you read the other pages you'll find a few people supporting your approach, some warning of genuine pitfalls in your approach and still others who find it completely immoral...... I'm rather mystified (no I'm not - it's P.H.
) as to howwe've got from the thread title to postmen's uniforms
.My 'friend's' situation was:
Mother sold family home, gifted her sons & their spouses the money, they bought a sheltered flat and allowed their mother to live in it rent free.
When the mother eventually needed to go into a home she obviously had held
no assets for a long time ..... Bingo!
Flat then sold using sons & spouses annual CGT allowances.
silentbrown said:
Elderly said:
Mother sold family home, gifted her sons & their spouses the money, they bought a sheltered flat and allowed their mother to live in it rent free.
Still likely to fall foul of IHT rules ... and because of that, any "defence" that the house was gifted as part of IHT planning probably won't wash.Elderly said:
When the mother eventually needed to go into a home she obviously had held
no assets for a long time
What was "a long time"?no assets for a long time
Actually the sheltered flat was purchased by the sons and their spouses using their own funds before their mother happened to gift money to them.
IHT didn't come into it, the mother survived 7 years and in any case each half of the house, which was owned separately with her late husband, was just below the IHT threshold.
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