Gifting v's care home fees.
Discussion
Following on from my previous question 'Gifting from a joint account'.
My old Dad has Alzheimer's and will no doubt have to go into care at sometime in the future.
I realise that he can't simply give his money away to avoid care home costs, and understand that rules about 'gifting' and 'giving' have more to do with inheritance tax.
Mum has always 'gifted' from their joint account - Dad hasn't …….
…….. if he were to start 'gifting' and 'giving' would it be said that he's only started doing it to avoid (some) care home costs?
TIA
My old Dad has Alzheimer's and will no doubt have to go into care at sometime in the future.
I realise that he can't simply give his money away to avoid care home costs, and understand that rules about 'gifting' and 'giving' have more to do with inheritance tax.
Mum has always 'gifted' from their joint account - Dad hasn't …….
…….. if he were to start 'gifting' and 'giving' would it be said that he's only started doing it to avoid (some) care home costs?
TIA
Thought there 7 year rule for death, but does it apply for stuff like this too?
Death rules(The 7 year rule)
If there’s Inheritance Tax to pay, it’s charged at 40% on gifts given in the 3 years before you die.
Gifts made 3 to 7 years before your death are taxed on a sliding scale known as ‘taper relief’.
Years between gift and death Tax paid
less than 3 40%
3 to 4 32%
4 to 5 24%
5 to 6 16%
6 to 7 8%
7 or more 0%
Death rules(The 7 year rule)
If there’s Inheritance Tax to pay, it’s charged at 40% on gifts given in the 3 years before you die.
Gifts made 3 to 7 years before your death are taxed on a sliding scale known as ‘taper relief’.
Years between gift and death Tax paid
less than 3 40%
3 to 4 32%
4 to 5 24%
5 to 6 16%
6 to 7 8%
7 or more 0%
Some authorities are more aggressive at chasing this than others. My Mum was very right wing and felt it was right that she paid her own way.
She was pretty dismayed to find only her and one other resident (of 25) were paying for themselves, and that it didn't mean she got a higher standard of service. Many residents had given houses away, never mind money.
She was pretty dismayed to find only her and one other resident (of 25) were paying for themselves, and that it didn't mean she got a higher standard of service. Many residents had given houses away, never mind money.
The seven year rule applies just to inheritance tax.
As far as care home fees are concerned, local authorities can look into a persons finances and go back as far as they want. If they think money or assets have been purposely given away to avoid having to pay care home fees, then they can claw it back.
As far as care home fees are concerned, local authorities can look into a persons finances and go back as far as they want. If they think money or assets have been purposely given away to avoid having to pay care home fees, then they can claw it back.
I work with Local Authorities in this field and make no mistake as to how hard they pursue any assets that have suddenly gone.
The other thing to remember is that most LA's are moving away from a residential care model to domiciliary based ones so if a couple own their own home and one needs care at home then the LA will pay for it once liquid assets are down to around £23k. They will only be interested in the house if it's just the person needing support living there.
And no, you can't move in with mum beforehand!
The other thing to remember is that most LA's are moving away from a residential care model to domiciliary based ones so if a couple own their own home and one needs care at home then the LA will pay for it once liquid assets are down to around £23k. They will only be interested in the house if it's just the person needing support living there.
And no, you can't move in with mum beforehand!
Davey Blueeyes said:
I work with Local Authorities in this field and make no mistake as to how hard they pursue any assets that have suddenly gone.
The other thing to remember is that most LA's are moving away from a residential care model to domiciliary based ones so if a couple own their own home and one needs care at home then the LA will pay for it once liquid assets are down to around £23k. They will only be interested in the house if it's just the person needing support living there.
And no, you can't move in with mum beforehand!
The so called 'dementia tax' would have ensured you get to keep £100k of your assets but apparently this existing system is far more favourable to some The other thing to remember is that most LA's are moving away from a residential care model to domiciliary based ones so if a couple own their own home and one needs care at home then the LA will pay for it once liquid assets are down to around £23k. They will only be interested in the house if it's just the person needing support living there.
And no, you can't move in with mum beforehand!
There are plenty of instances where differing rules relate to single situations - depending on what legislation being considered.
There are even cases where the tax authorities apply different rules depending on the tax being looked at.
There are even cases where the tax authorities apply different rules depending on the tax being looked at.
Edited by Eric Mc on Wednesday 5th September 14:28
btdk5 said:
Would you actually want him to be in a local authority care home, rather than somewhere he could afford?
As far as I'm aware whether he were in a local authority home or the best Bupa home the council will contribute as long as he is below a certain threshold. Above that threshold they won't - he becomes self funding. Whether his self funding could afford somewhere better is another matter ……?
But it matters not - as a family we can afford the top-up fees to put him in 'the best home' ……. it would just be nice if the council made a contribution
Squiggs said:
- as a family we can afford the top-up fees to put him in 'the best home' ……. it would just be nice if the council made a contribution
I had to fight quite hard to persuade the local authority and the care home to do this.The small care home wouldn't accept any L.A. fully or partially funded inmates, theirs were all self-funded.
The reason they gave me was that dealing with the L.A. was a bureaucratic and cashflow nightmare.
I solved this by paying the home the total monthly fees up front and they then gave me a credit when the L.A. eventually paid up their contribution that my mother was entitled to, in their own inefficient time.
The L.A. didn't want to partially fund, as they said that they had too many funders through unforeseen circumstances at some stage fail to keep up their financial commitment, and the L.A. would then be left to pay the entire amount at that home; as it can be medically argued that moving a Dementia patient to another home (a block buy cheap L.A. type home) would be harmful.
How does the system work practically and what counts as an asset?
Do for example cars count? If they don't could the old person buy an expensive old Porsche.
Do stocks, shares, premium bonds or shares in a LTD company. Say said person is a share holder in a LTD how is that position valued?
Do for example cars count? If they don't could the old person buy an expensive old Porsche.
Do stocks, shares, premium bonds or shares in a LTD company. Say said person is a share holder in a LTD how is that position valued?
anonymous said:
[redacted]
This is a very good point. The vast majority of residential care is in private hands that will either have contracts with the LA or not. My LA only has one residential care setting left, the rest were closed or sold because of poor care standards.Plus If anyone thinks BUPA are the final word in a 'good' care homes I would read some of their CQC inspection reports.
Fab32 said:
Do for example cars count? If they don't could the old person buy an expensive old Porsche.
Do stocks, shares, premium bonds or shares in a LTD company.
No, No, Yes. (IANAL)Do stocks, shares, premium bonds or shares in a LTD company.
In practice you get a long form from the Local Authority, if you want them to fund the care....
Age UK had some helpful sheets, basically cash, shares and the house counts as assets. Chattels don't.
Using cash to buy chattels, to then give away, is not approved.
Although if you have more than about £10K-£23K of "assets/not chattels" you're self funding anyway.
https://www.ageuk.org.uk/information-advice/care/p...
See Pg 7 of sheet 40 - Mrs Kapoor...
So if person buys a Porsche for his own use, then finds they need to go into a home, possibly OK.
If they fear/find they need to go into a home, then buy a car, not OK.
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