Care home assessment and inheritance planning
Discussion
I know Burnham has brought up the idea of care on the NHS, but as I understand it it's assuming you stay in your own home...which is fine, but it got me thinking. A friend of mine's mother needed (and still needs!) residential care and it's costing about £6K a month, and has required the sale of her home and the loss of most of her savings. 
We're not at that point yet, thankfully, but my wife and I have both had health episodes lately, and it's got me thinking. We're in Scotland BTW where the rules might be slightly different, so I'd expect to pay more to get less. We're both approaching 70, and have 2 grown-up kids that we'd really like to leave the maximum we can to them. At the moment I'm just looking at this from my perspective if my wife needed care - if I need it, I'm thinking a trip to Switzerland would be in order!
So in terms of an assessment we have a family home (with just 2 of us in it) that I gather is excluded from any 'wealth' assessment if I'm still living in it?
She has no savings or pensions worth mentioning, but I have a fairly decent (untouched) pension in my name. Since it's just in my name is it safe from any assessment for any care home costs for her?
We have a number of rental properties in joint names, but mortgaged. I'm assuming half the income would be assessed as her income, but would that mean worst case we have to sell in order to get half her equity, which would then be used for care costs?
We have another higher value rental property that I put through a limited company, of which me, the wife and 2 kids are 4 equal shareholders. Would a quarter of that be assessed as available for care costs? That's a tricky one for me as the company owns the property, and right now there is a large liability on the balance sheet for a loan I made to it to buy the property, so the full (asset) value of the property is not reflected in the company valuation of which she's a 1/4 shareholder.
Assuming my pension is 'safe' then not much to do there...but if the rental properties are to be taken into account then maybe at some point we need to consider selling and doing something with the cash - like spending it...
Since I'm on a roll (and thank you for your attention in this matter
) I know pensions are going to be included in the estate for inheritance tax purposes in the future. I'm also aware of the 7-year 'gift' rule to the kids, but taking it out in any reasonable amount to give them now will have me hitting higher rate tax. I don't suppose there's a more tax efficient way of getting funds out my pension and giving it to the kids?
I was also plotting using some of my pension to buy a 'family' car, for use of me and the mrs, and the kids and their partners for use on euro trips and the like. Probably a Morgan. If I buy the car how do I confirm it as a 'gift' to the kids (yea, I'd have to last another 7 years), but we all have use of it. I know the V5 identifies the keeper and not the owner so just putting their name on the V5 probably isn't the answer. And if I end up paying running costs and insurance and the like, would that bugger-up the notion that I don't really own it but it's all gifted to the kids?
Yea, I probably should speak to an IFA, but my experience with them has been poor over the years to say the least; there sees to be a common script to seem interested in your circumstances, but the outcome was always to then buy some other pension plan from them, so my financial planning has been home grown so far.
We're not at that point yet, thankfully, but my wife and I have both had health episodes lately, and it's got me thinking. We're in Scotland BTW where the rules might be slightly different, so I'd expect to pay more to get less. We're both approaching 70, and have 2 grown-up kids that we'd really like to leave the maximum we can to them. At the moment I'm just looking at this from my perspective if my wife needed care - if I need it, I'm thinking a trip to Switzerland would be in order!
So in terms of an assessment we have a family home (with just 2 of us in it) that I gather is excluded from any 'wealth' assessment if I'm still living in it?
She has no savings or pensions worth mentioning, but I have a fairly decent (untouched) pension in my name. Since it's just in my name is it safe from any assessment for any care home costs for her?
We have a number of rental properties in joint names, but mortgaged. I'm assuming half the income would be assessed as her income, but would that mean worst case we have to sell in order to get half her equity, which would then be used for care costs?
We have another higher value rental property that I put through a limited company, of which me, the wife and 2 kids are 4 equal shareholders. Would a quarter of that be assessed as available for care costs? That's a tricky one for me as the company owns the property, and right now there is a large liability on the balance sheet for a loan I made to it to buy the property, so the full (asset) value of the property is not reflected in the company valuation of which she's a 1/4 shareholder.
Assuming my pension is 'safe' then not much to do there...but if the rental properties are to be taken into account then maybe at some point we need to consider selling and doing something with the cash - like spending it...
Since I'm on a roll (and thank you for your attention in this matter
) I know pensions are going to be included in the estate for inheritance tax purposes in the future. I'm also aware of the 7-year 'gift' rule to the kids, but taking it out in any reasonable amount to give them now will have me hitting higher rate tax. I don't suppose there's a more tax efficient way of getting funds out my pension and giving it to the kids?I was also plotting using some of my pension to buy a 'family' car, for use of me and the mrs, and the kids and their partners for use on euro trips and the like. Probably a Morgan. If I buy the car how do I confirm it as a 'gift' to the kids (yea, I'd have to last another 7 years), but we all have use of it. I know the V5 identifies the keeper and not the owner so just putting their name on the V5 probably isn't the answer. And if I end up paying running costs and insurance and the like, would that bugger-up the notion that I don't really own it but it's all gifted to the kids?
Yea, I probably should speak to an IFA, but my experience with them has been poor over the years to say the least; there sees to be a common script to seem interested in your circumstances, but the outcome was always to then buy some other pension plan from them, so my financial planning has been home grown so far.
tvrolet said:
So in terms of an assessment we have a family home (with just 2 of us in it) that I gather is excluded from any 'wealth' assessment if I'm still living in it?
Whilst I believe the rules in Scotland differ in terms of what the numbers are at what amount of own savings you then pay ( I think England is lower ) and free care home at home is given ( at least up to a £ value ) there is still a financial assessment. Your own home being lived in does not count.
She has no savings or pensions worth mentioning, but I have a fairly decent (untouched) pension in my name. Since it's just in my name is it safe from any assessment for any care home costs for her?
I believe pensions don’t count unless you have already already transferred it on to say a SIPP when it might although I think this would be unlikely.
We have a number of rental properties in joint names, but mortgaged. I'm assuming half the income would be assessed as her income, but would that mean worst case we have to sell in order to get half her equity, which would then be used for care costs?
Rental properties would count though less any allowance for the mortgage payment deducted from the income received.
We have another higher value rental property that I put through a limited company, of which me, the wife and 2 kids are 4 equal shareholders. Would a quarter of that be assessed as available for care costs? That's a tricky one for me as the company owns the property, and right now there is a large liability on the balance sheet for a loan I made to it to buy the property, so the full (asset) value of the property is not reflected in the company valuation of which she's a 1/4 shareholder.
Only a guess on this one but yes albeit only relative to your shares.
Assuming my pension is 'safe' then not much to do there...but if the rental properties are to be taken into account then maybe at some point we need to consider selling and doing something with the cash - like spending it...
Since I'm on a roll (and thank you for your attention in this matter) I know pensions are going to be included in the estate for inheritance tax purposes in the future. I'm also aware of the 7-year 'gift' rule to the kids, but taking it out in any reasonable amount to give them now will have me hitting higher rate tax. I don't suppose there's a more tax efficient way of getting funds out my pension and giving it to the kids?
If you have access to a TFLS that could be withdrawn for them ?
I’ve done just that some time ago for mine as early inheritances.
I was also plotting using some of my pension to buy a 'family' car, for use of me and the mrs, and the kids and their partners for use on euro trips and the like. Probably a Morgan. If I buy the car how do I confirm it as a 'gift' to the kids (yea, I'd have to last another 7 years), but we all have use of it. I know the V5 identifies the keeper and not the owner so just putting their name on the V5 probably isn't the answer. And if I end up paying running costs and insurance and the like, would that bugger-up the notion that I don't really own it but it's all gifted to the kids?
Yea, I probably should speak to an IFA, but my experience with them has been poor over the years to say the least; there sees to be a common script to seem interested in your circumstances, but the outcome was always to then buy some other pension plan from them, so my financial planning has been home grown so far.
Whilst I believe the rules in Scotland differ in terms of what the numbers are at what amount of own savings you then pay ( I think England is lower ) and free care home at home is given ( at least up to a £ value ) there is still a financial assessment. Your own home being lived in does not count.
She has no savings or pensions worth mentioning, but I have a fairly decent (untouched) pension in my name. Since it's just in my name is it safe from any assessment for any care home costs for her?
I believe pensions don’t count unless you have already already transferred it on to say a SIPP when it might although I think this would be unlikely.
We have a number of rental properties in joint names, but mortgaged. I'm assuming half the income would be assessed as her income, but would that mean worst case we have to sell in order to get half her equity, which would then be used for care costs?
Rental properties would count though less any allowance for the mortgage payment deducted from the income received.
We have another higher value rental property that I put through a limited company, of which me, the wife and 2 kids are 4 equal shareholders. Would a quarter of that be assessed as available for care costs? That's a tricky one for me as the company owns the property, and right now there is a large liability on the balance sheet for a loan I made to it to buy the property, so the full (asset) value of the property is not reflected in the company valuation of which she's a 1/4 shareholder.
Only a guess on this one but yes albeit only relative to your shares.
Assuming my pension is 'safe' then not much to do there...but if the rental properties are to be taken into account then maybe at some point we need to consider selling and doing something with the cash - like spending it...
Since I'm on a roll (and thank you for your attention in this matter
) I know pensions are going to be included in the estate for inheritance tax purposes in the future. I'm also aware of the 7-year 'gift' rule to the kids, but taking it out in any reasonable amount to give them now will have me hitting higher rate tax. I don't suppose there's a more tax efficient way of getting funds out my pension and giving it to the kids?If you have access to a TFLS that could be withdrawn for them ?
I’ve done just that some time ago for mine as early inheritances.
I was also plotting using some of my pension to buy a 'family' car, for use of me and the mrs, and the kids and their partners for use on euro trips and the like. Probably a Morgan. If I buy the car how do I confirm it as a 'gift' to the kids (yea, I'd have to last another 7 years), but we all have use of it. I know the V5 identifies the keeper and not the owner so just putting their name on the V5 probably isn't the answer. And if I end up paying running costs and insurance and the like, would that bugger-up the notion that I don't really own it but it's all gifted to the kids?
Yea, I probably should speak to an IFA, but my experience with them has been poor over the years to say the least; there sees to be a common script to seem interested in your circumstances, but the outcome was always to then buy some other pension plan from them, so my financial planning has been home grown so far.
For Scottish specific details, look at
https://www.mygov.scot/financial-assessments-care
https://www.careinfoscotland.scot/topics/care-home...
https://www.mygov.scot/financial-assessments-care
https://www.careinfoscotland.scot/topics/care-home...
I think you hit the nail on the head when you said you should spend it. If you've both had a few health scares and are now 70s I'd question how long you intend running the business of rental properties against simplifying your estate and enjoying the time whilst you're both fit and able.
If others rely on income from the business that's understandable to keep it going but I'd be hands off at your age and enjoying myself now.
I don't know the law in Scotland but my understanding that as a married couple for care assessment any income is considered joint even if it is in single name accounts. However treating it separately surely you'd be contributing if your wife's money ran out rather than have the LA put her in a care home of their choosing based on it being the cheapest?
If others rely on income from the business that's understandable to keep it going but I'd be hands off at your age and enjoying myself now.
I don't know the law in Scotland but my understanding that as a married couple for care assessment any income is considered joint even if it is in single name accounts. However treating it separately surely you'd be contributing if your wife's money ran out rather than have the LA put her in a care home of their choosing based on it being the cheapest?
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