Wealth / Asset Protection Products / Care Costs
Discussion
Morning all,
Just looking for some advice on behalf of my Dad.
Through a combination of losing my Mum last year and liquidating a business pre-October budget, my Dad is now in a position where he has quite a chunk of cash in savings, investments etc. When Mum passed away, her 1/2 of the family home went into a discretionary will trust so we also have 1/2 the value of the home to consider.
He's ok for being under IHT thresholds when Mum's nil rate bands are passed over so now we are looking at asset / wealth protection measures with respect to care costs, if that were to be an issue in the future.
Having informal chats with various people has resulted a suggestion that the cash / investments could potentially be wrapped up into a product which would result in Dad receiving a monthly income but be excluded from means testing.
Does anyone know of such a product and what the in's and outs are of establishing one?
Cheers.
Just looking for some advice on behalf of my Dad.
Through a combination of losing my Mum last year and liquidating a business pre-October budget, my Dad is now in a position where he has quite a chunk of cash in savings, investments etc. When Mum passed away, her 1/2 of the family home went into a discretionary will trust so we also have 1/2 the value of the home to consider.
He's ok for being under IHT thresholds when Mum's nil rate bands are passed over so now we are looking at asset / wealth protection measures with respect to care costs, if that were to be an issue in the future.
Having informal chats with various people has resulted a suggestion that the cash / investments could potentially be wrapped up into a product which would result in Dad receiving a monthly income but be excluded from means testing.
Does anyone know of such a product and what the in's and outs are of establishing one?
Cheers.
Armitage.Shanks said:
I'm not well up on leaving assets in trust but query whether the nil rate IHT band on the value of the house has passed over if your mum has used 1/2 for the trust?
A reason I haven't split our home as tenants in common so the full allowance can be passed to the surviving spouse.
AIUI, whilst the trust is a discretionary will trust, i'm the only beneficiary of it and as her Son and direct descendant, the RNRB can be maintained and passed onto my Dad without issue - although i'm happy to be corrected on this. A reason I haven't split our home as tenants in common so the full allowance can be passed to the surviving spouse.
I've never seen a simple answer to this question - which comes up a lot on here and elsewhere.
There must be one.
Your best bet is to hope that your dad doesn't need to go into a care home.
Most people don't.
If he has financial resources then home help may be an option.
Alternatively, hang on for the robots.
That's going to be around 30 years or so I reckon.
Elon's got distracted by shiny things again.
There must be one.
Your best bet is to hope that your dad doesn't need to go into a care home.
Most people don't.
If he has financial resources then home help may be an option.
Alternatively, hang on for the robots.
That's going to be around 30 years or so I reckon.
Elon's got distracted by shiny things again.
lenny007 said:
that the cash / investments could potentially be wrapped up into a product which would result in Dad receiving a monthly income
Would that not be an anuity? You give them £100K and they give you ~£5K pa for about 20 years...However it might not get round deprivation of assets (https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/deprivation-of-assets/)
And as one is liable for care fees if the assets, including home, are greater than ~£24K, then the family will still be paying, unless you have a very cunning plan.
The other option is to take out equity release and go on an indefinite world cruise, other ideas in the enjoying retirement thread, a 911-GT3 or two?
This, however, may not be seen as Asset Protection for the next generation.
This boils down to care home costs and who is going to pay for it.
Are you looking at protecting the money to provide for any care costs in the future or are you looking at ringfencing assets so they can't be touched for care costs and the LA pick up the tab at the council tax payers expense?
LA Care is limiting in terms of comforts although there will be a minimum standard that they'll 'just' meet. Hopefully.
If you want to rely on the LA when/if the time comes it might be best to start spending or gifting assets under the 7yr rule. The house is more problematic 'gift with reservation' etc if your father remains in it. You'll need specialist advice.
I've no intention of going into a care home when I can't look after myself as I will go the Dignitas route. My hope is I'm in a position to make that decision at the right time so my views on what is right/wrong are largely irrelevant.
Are you looking at protecting the money to provide for any care costs in the future or are you looking at ringfencing assets so they can't be touched for care costs and the LA pick up the tab at the council tax payers expense?
LA Care is limiting in terms of comforts although there will be a minimum standard that they'll 'just' meet. Hopefully.
If you want to rely on the LA when/if the time comes it might be best to start spending or gifting assets under the 7yr rule. The house is more problematic 'gift with reservation' etc if your father remains in it. You'll need specialist advice.
I've no intention of going into a care home when I can't look after myself as I will go the Dignitas route. My hope is I'm in a position to make that decision at the right time so my views on what is right/wrong are largely irrelevant.
It will be down to a balance /combination of what your Father / you are trying to achieve and for whom's benefit.
Councils are very quick to investigate "deprivation of assets " as has already been mentioned.
There is the added complication in that your Father may need at home carers long before a care home itself.
Trying to work out what money he needs or may need access to is not easy.
IHT and all the implications of an estate themselves is in itself a complex thing and if it were easy to resolve everyone affected would do so.
Funnily enough just going through something a bit similar with my FIL now.His son has suggested he could have an early inheritance of £300k given to him and he's happy for that to go into his will so that his sister ( my wife obviously ) will get that first when he then passes away and the estate is settled !
Councils are very quick to investigate "deprivation of assets " as has already been mentioned.
There is the added complication in that your Father may need at home carers long before a care home itself.
Trying to work out what money he needs or may need access to is not easy.
IHT and all the implications of an estate themselves is in itself a complex thing and if it were easy to resolve everyone affected would do so.
Funnily enough just going through something a bit similar with my FIL now.His son has suggested he could have an early inheritance of £300k given to him and he's happy for that to go into his will so that his sister ( my wife obviously ) will get that first when he then passes away and the estate is settled !
lenny007 said:
AIUI, whilst the trust is a discretionary will trust, i'm the only beneficiary of it and as her Son and direct descendant, the RNRB can be maintained and passed onto my Dad without issue - although i'm happy to be corrected on this.
A discretionary trust will have more than one "potential" beneficiary, if there is a sole beneficiary it can't be discretionary, the trustees won't have any discretion to apply. Discretionary trusts and interest in possession trusts are taxed differently and one will preserve the RNRB the other won't.Some Councils investigate deprivation of assets alot more than others but none are forensic accountants they really do not have the expertise in place and with this in mind it would be prudent for your father to start distributing and spending asap as the 7 year clock starts ticking.
Also worth investigating whether your father qualifies as having a life interest in possession in the property although this will be subject to him paying a reasonable rent and on this basis this could well exclude him from care home fees when and if needed.
Worth bearing in mind there could well be a CGT liability from the date of your mothers passing to the eventual date the property is sold although we managed to successfully argue otherwise when my mother went into care some years ago after my fathers passing and my mother remained in the property as life tenant for almost 20 years.
Also worth investigating whether your father qualifies as having a life interest in possession in the property although this will be subject to him paying a reasonable rent and on this basis this could well exclude him from care home fees when and if needed.
Worth bearing in mind there could well be a CGT liability from the date of your mothers passing to the eventual date the property is sold although we managed to successfully argue otherwise when my mother went into care some years ago after my fathers passing and my mother remained in the property as life tenant for almost 20 years.
Mr-B said:
A discretionary trust will have more than one "potential" beneficiary, if there is a sole beneficiary it can't be discretionary, the trustees won't have any discretion to apply. Discretionary trusts and interest in possession trusts are taxed differently and one will preserve the RNRB the other won't.
Double checked and it's single beneficiary so not a discretionary will trust, just a general one.Gassing Station | Finance | Top of Page | What's New | My Stuff