Gifting of money vs deprivation of assets

We're not talking the odd £1000. What has prompted the conversation is new roof on large house type money.

Also that wasn't the question. I'm asking if there is point when age becomes a more significant factor than existing health and unused income when a decision on deprivation of assets is made when there is sudden change of circumstance.

Just to reassure everyone re intentions, the first line is that she moves in with me with her own bedroom, sitting room and bathroom!

I think councils take a very different view and don't follow the IHT rules. Different councils have different "rules" and of course circumstances vary enormously. But there seems to be a lot of emphasis on intention. Of course, the sooner the better really. A council is highly unlikely to go back a decade or two. They're far more likely to start close to the date of need of care home and work backwards to gain a general overview of the person's finances, then check for any major asset disposals, i.e. by cross checking the land registry etc.

Sometimes the personal circumstances make it obvious. I.e. an otherwise healthy person, being diagnosed with early stage dementia/alzheimer who suddenly transfers a property or loads of investments/shares looks highly suspicious, so that fact alone is more important than number of years before care becomes necessary.

Likewise someone otherwise healthy, in younger retirement, deciding to transfer/gift property, investments, cash, for no obvious reason at all, with the full expectation they'd continue to be in good health and live independently for another decade or two, would probably be fine against council challenge, even if they then went onto contract something needing care home just a few years later, as there was clearly no "intent" to avoid care home costs at the time of the gifts, as there was no reason to think a care home would be necessary within realistic time frames.

Pretty sure I've seen that figure banded about quite a lot. I think Teresa May used it too when she was trying to get a care home cost limit put into statute. The statistics seem to indicate the average time the average person spends in a care home is 12-18 months, so at an average of £1500-£2000 per week, it seems to work out about £85k.

Of course, the majority of people don't go into care homes at all. And a minority will spend a lot more time than 12-18 months in one, but the £85k is an average.

@ForPearlViper What she’s giving you is peanuts compared with care costs. If she spent £1000 on you, it would bring the need for LA support forward by a week.

Has she got a house?

She can give you things, pay for things if she likes, IF she needs care house can be sold to pay. Treating you is hardly divesting herself of all her savings, and she doesn’t currently signs of needing care.

It is a minority of people who go into care homes.

Thank you, I'll go and look there too.

@ForPearlViper funnily enough I've just posted something similar on the money forum - except he's 85

Interesting thread as I have similar situation. My Mum has an approach where she wants to see people enjoying her generosity, preferably with her, rather than just leaving money behind.

As an only child, every time I have an expense she just wants to pay for it and she is comfortably enough off to do it. However, I've been telling her she can't just do that, specifically because of deprivation of assets.

However, she is reasonably fit and health for her age. Perfectly capable of looking after herself, her home and her finances. On paper, you'd think 'well that's OK then'. The big 'however' though is she's 90.

So, does there come a point when age outweighs health and finances. Should it be an automatic assumption that it would be reasonable to anticipate someone will need care when they reach a certain age?

What is it you're thinking of doing
Who is gifting the money
Are they in good health
Are they likely to need care
How much do they want to give and who to

I suppose until you've experienced it, most people have no idea of the reality of what letting the state pay for it means. It isn't just comparing the cost of a place in a CH but whether you'd even get there.

For me it was the realisation that relative could choose to go into residential
care and have a much much better quality of life because she could afford to pay for it vs being left with a few carer visits each day, a less than optimal diet, worrying constantly about security and house maintenance and spending the majority of the time alone.

My dad's just coming up to 5 years in nursing home. Didn't look as if he'd more than months to live when he went in, now it looks as if he's aiming for 110.

Average life expectancy is 24 months in care homes without nursing and 12 months in those with nursing, according to the British Geriatrics Society.

That probably accounts for the 18 month overall average figure.

When people talk about trying to avoid deprivation of assets and leaving possibly elderly parents with just the £23,000 in savings, do they not think about what you will be offered if you need care versus being able to choose.
If at all possible I would not like to leave someone in this position. But on mumsnet alot of people think it’s a good idea to just let the state pay. Not realising the lack of choice and level of care.

As pp says it’s all about intention. Does it look like a genuine gift to help your kids or does it look like intentionally trying to bring your assets below the threshold for state care.

Obviously your health and finances at the time of the gift will be very relevant to this question. If at the time of the gift the giver is healthy and/or will still have plenty of money after the gift, then it looks more like it’s for genuine gift purposes.
However if at the time of the gift it’s clear the giver will need care at some point and/or they will be left with very little after the gift, it looks much more like intentional deprivation.

That sounds reasonable, but I thought that was nursing home? And that care home was nearly 3 years?

18 months is about the average life expectancy after going into a care home. That's probably the basis for his figure.

The IFA said that 'standard' care costs are £55,000 per annum. My private and state pension would cover some of it, and the additional costs would come from my savings. If you needed that level of care, you would also be able to claim Attendance Allowance of about £5200 a year. You’d lose the AA once you needed financial help from the LA.

That would last you just over a year in care

It wouldn’t have made much difference to most people - it applied to “care” costs not “board and lodging”, so the limit would have been reached only after about 3 years.

You’re right that some sort of insurance is the way to go.

Either the so-called “death tax” or “dementia tax” would have been a better system.

I've found my original email regarding care costs, I am sorry I got mixed up, the £85K was only in reference to the possibility of the actual care costs being capped at that point after three years. The 'living' costs of £20K plus would still have to be paid.

I do have more than £85K saved towards my possible care costs.

The IFA said that 'standard' care costs are £55,000 per annum. My private and state pension would cover some of it, and the additional costs would come from my savings.

Yeah, but you can have up to £85 in as many institutions as you like, so that can't be the reason.

If there is a diagnosis of a life limiting illness you will be on shaky ground regardless of any advice. However, why would you gift money that you need for care? As a self funder, you have more choice.

If you are gifting whilst in robust good health, you can argue gifting was made in good faith. The earlier you gift, the better. Make gifts through IHT403 (keep a record obvs) and use the £3k allowance. Of course as long as you don't die within 7 years, you can go over the £3k allowance, otherwise tax is paid (dependent on size of estate) on a sliding scale. If you're married, use the nil-rate band transfer.

Most of the larger solicitors will have an Estate and Inheritance Planning department. They will look at everything to make sure you get the best, legal solution for your circumstances, including PoAs etc.

I think 85k is the max you can have that is protected by the Financial Services compensation scheme. You can have more, but if the bank goes under, you’re only protected up to £85k.

@Salome61 it was proposed back in 2022 - as a vote winner - but then they never followed it through as they knew full well the country couldn't afford it - in principle I agree totally with that but I think other things have to come alongside it such as an insurance based pay in system at sensible cost to make it remotely affordable- otherwise we will have to have much higher taxation

@MereDintofPandiculation I am very fortunate and do have a small Teacher's pension, as well as a pension from my late husband. This income is included in my 'care' costs as it would just about cover the living costs. My husband died when I was 59, it was a great shock to me I had to wait seven years for my State pension, I almost wished my life away and spent most of our savings waiting for it. I am glad to say I was 66 in April.

There was a new Bill being discussed at capping care costs at £85K - looks like it has been scrapped. Adult social care charging reform: further details - GOV.UK.

My aunt is just about to go into assisted living at £1500 per month, she doesn't need nursing. She has a small flat that has to be sold to finance her living there. She had lost track of her lease years and unfortunately has just had to spend her life savings of £10K extending the lease.