SIPP and care home fees
Discussion
My FiL, aged 85, has gone into care and will probably remain there now. amongst other finance arrangements, he has a healthy SIPP which he's never touched. Obviously he can draw the tax free 25% from it, but another family member has said that they believe it can all be used for care fees without paying any tax on it. Any truth in that? Never heard of it myself. I assumed that the remaining 75% would be taxed at his appropriate rate.
He also has ISAs with a similar value to the SIPP. Assuming the tax free care fees thing isn't correct, I assume he'd be better using the ISAs to fund care first (after the 25% SIPP is used up) as that would be tax free?
Am I also right in thinking that if he makes an Expression of Wishes with the remainder of the SIPP, that goes to the nominated person(s) tax free, or is that only for spouses?
TIA.
He also has ISAs with a similar value to the SIPP. Assuming the tax free care fees thing isn't correct, I assume he'd be better using the ISAs to fund care first (after the 25% SIPP is used up) as that would be tax free?
Am I also right in thinking that if he makes an Expression of Wishes with the remainder of the SIPP, that goes to the nominated person(s) tax free, or is that only for spouses?
TIA.
Rather weirdly, the first letter of the word "amongst" is in capitals when I write but lower case when I submit...
Edited by -Cappo- on Saturday 22 June 00:15
-Cappo- said:
My FiL, aged 85, has gone into care and will probably remain there now. amongst other finance arrangements, he has a healthy SIPP which he's never touched. Obviously he can draw the tax free 25% from it, but another family member has said that they believe it can all be used for care fees without paying any tax on it. Any truth in that? Never heard of it myself. I assumed that the remaining 75% would be taxed at his appropriate rate.
He also has ISAs with a similar value to the SIPP. Assuming the tax free care fees thing isn't correct, I assume he'd be better using the ISAs to fund care first (after the 25% SIPP is used up) as that would be tax free?
Am I also right in thinking that if he makes an Expression of Wishes with the remainder of the SIPP, that goes to the nominated person(s) tax free, or is that only for spouses?
TIA.
It's possible that the other family member was referring to a serious ill health lump sum.He also has ISAs with a similar value to the SIPP. Assuming the tax free care fees thing isn't correct, I assume he'd be better using the ISAs to fund care first (after the 25% SIPP is used up) as that would be tax free?
Am I also right in thinking that if he makes an Expression of Wishes with the remainder of the SIPP, that goes to the nominated person(s) tax free, or is that only for spouses?
TIA.
I guess where to draw he care home fees from depends on the size of his estate. If it's over the IHN threshold then use the ISA, if under perhaps use the SIPP.
As previous stated, as he is over age 75 whoever inherits the SIPP will be liable to an income tax assessment on any withdrawals.
Rufus Stone said:
It's possible that the other family member was referring to a serious ill health lump sum.
I guess where to draw he care home fees from depends on the size of his estate. If it's over the IHN threshold then use the ISA, if under perhaps use the SIPP.
As previous stated, as he is over age 75 whoever inherits the SIPP will be liable to an income tax assessment on any withdrawals.
Thanks for that. He’s in care because he has recently-diagnosed stage 4 cancer, although he’s not “very ill” yet, if that makes sense. It’s actually more down to his needs at his age, ie he just needs looking after now. I guess where to draw he care home fees from depends on the size of his estate. If it's over the IHN threshold then use the ISA, if under perhaps use the SIPP.
As previous stated, as he is over age 75 whoever inherits the SIPP will be liable to an income tax assessment on any withdrawals.
I’ll look into the serious ill health lump sum, that’s new on me.
His overall estate is definitely over the IHT threshold but I don’t know how he’s got everything structured. He was a partner in a law firm, so he’s probably tied everything up as well as he can.
-Cappo- said:
Thanks for that. He’s in care because he has recently-diagnosed stage 4 cancer, although he’s not “very ill” yet, if that makes sense. It’s actually more down to his needs at his age, ie he just needs looking after now.
I’ll look into the serious ill health lump sum, that’s new on me.
His overall estate is definitely over the IHT threshold but I don’t know how he’s got everything structured. He was a partner in a law firm, so he’s probably tied everything up as well as he can.
Either way the SIPP is outside IHT so best use savings to pay for the care home and reduce any IHT liability. I’ll look into the serious ill health lump sum, that’s new on me.
His overall estate is definitely over the IHT threshold but I don’t know how he’s got everything structured. He was a partner in a law firm, so he’s probably tied everything up as well as he can.
Simpo Two said:
-Cappo- said:
His overall estate is definitely over the IHT threshold but I don’t know how he’s got everything structured. He was a partner in a law firm, so he’s probably tied everything up as well as he can.
A Trust perhaps?I took every piece of paper from my dad's house and sorted and refiled everything and it all went back years and years and I was able to build a picture of his financial situation.
More and more institutions are going paperless and so there is no paper trail and the only way to manage is to have full control of the computer, email and mobile phone and with this you can be the person but without you have no way of knowing what you are missing.
Future LPA holders and executors of estates will have an impossible job without a paper trail.
More and more institutions are going paperless and so there is no paper trail and the only way to manage is to have full control of the computer, email and mobile phone and with this you can be the person but without you have no way of knowing what you are missing.
Future LPA holders and executors of estates will have an impossible job without a paper trail.
Actual said:
I took every piece of paper from my dad's house and sorted and refiled everything and it all went back years and years and I was able to build a picture of his financial situation.
More and more institutions are going paperless and so there is no paper trail and the only way to manage is to have full control of the computer, email and mobile phone and with this you can be the person but without you have no way of knowing what you are missing.
Future LPA holders and executors of estates will have an impossible job without a paper trail.
That’s very true, and actually he is an absolutely total technophobe; nothing whatsoever is online or even on a PC anywhere except for his car insurance which I sort for him (and he’s now giving that up anyway). It’s all papers and letters and phone calls. Even when I’ve renewed his insurance for him he’s asked for a paper copy of all the Ts and Cs. More and more institutions are going paperless and so there is no paper trail and the only way to manage is to have full control of the computer, email and mobile phone and with this you can be the person but without you have no way of knowing what you are missing.
Future LPA holders and executors of estates will have an impossible job without a paper trail.
Edited by -Cappo- on Monday 24th June 11:49
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