Are there any downsides to my financial plan?

[Rictasmorticia]

Let me start by saying I absolutely trust my kids and they trust each other. Same goes for son in law and daughters in law.Also, if the time comes when I need care, I will pay for the top notch available.

I am approaching 80 and have substantial savings. Over the last few years I have stopped paying into fixed rates so that I have enough ready money for care or health needs. This year the last few fixed rate accounts mature. Half of my savings are in ISAs.

I want to put the maturing non-IS money into joint accounts with each of my children. This way when I die they will have be able to easily access my money. Although they hold PoA for me, I know it will be less faff if my needs are met with money from the joint accounts.

I will discuss this with them, including tax implications. I don’t have enough to have to think about inheritance taxes.

What are the pitfalls or things I have not considered,

Any reason why mumsnet and not a FP given such sizeable assets?

OP says her estate is below the IHT threshold

And?

Substantial savings and presumably a home owner op?

@Rictasmorticia I really think you should see a financial advisor. You’re obviously able to afford one and I think it will be money well spent. With all due respect, I wouldn’t be taking advice on such an important issue from MN. Even if one of them is a qualified IFA, you need an in depth tailored consultation. Good luck.

@Rictasmorticia you are not asking for financial advice are you? I interpret this is more of a practical query.

My mother is a similar age. We discussed this but I wanted her money to be kept separate from mine for tax purposes.

I do have access to her current account account so I can pay for anything that comes up like an emergency.

If there are no concerns regarding joint accounts on a tax return, then the main thing is the trust factor between you and your children.

My feeling is that they should have access to a reasonable amount in case of emergency. I wouldn't lose the tax advantages of your ISAs for example.

The "risk" is that you fall out wothh your chikdren or they divorce and their half ofthe joint accounts become part of their martial assets.

But, if you're only talking about relatively small amounts, to enable them to have access to cash for practical purposes in the immediate aftermath of your death, I can't see a downside.

I previously worked in financial industry and don’t need help with investing the money. It is sizeable to me but not by Financial planning standards. Depending on the advice I get on here, I may consult a solicitor. Because of my age I need all my money in instant access. Thank you for the suggestion.

Correct, I have invested wisely when I was younger hence the money. I have always been cautious and came out of stocks and shares at the right time. I am able to save quite a lot of my pension.

Are either of your children on Universal Credit or anything else where savings may impact what they are able to get?

No, they all have more money than I do.

Then other than any tax issues that may impact them individually I can’t really see a downside.

My mother has actually done something similar, after some delays with being able to access money from my father’s accounts.

So estate not large enough to warrant financial planning advice. And so, by that definition, not sizeable.

My one concern with this that if the estate isn't going to be big enough to make inheritance tax a factor, I'm not sure about your belief that you'll be able to pay for top notch care, should the need arise for very long.

If you gift them the money and live for 7 years there will be no IHT anyway. If you trust them and make it clear, in private, that you see this money as theirs but also as a temporary slush fund that they can use then would that solve it.

You say you don’t have enough for IHT but if you have a large pension have you included this as the rules changed in the last budget.

This. Low cost areas average is around 4k a month, our local average is around 6k a month. My grandma had a "top notch" one and it was around 3k a week.

Edited to add I meant to quote a pp who said there wouldn't be enough for top notch care if below IHT threshold.

Oh I don't know, £1m in assets should cover care costs for about 15 years and that's without the pension income and attendance allowance. OP is already 80 so it should see her out.
@Rictasmorticia my Mum has done this with my sister (a widow) with her own building society account (a small inheritance she got) so that Dad can get access to it if Mum goes first. All the rest is in joint accounts so we probably won't even need a grant of probate on the first death.
As a pp has said though if one of your children divorces then that joint account could be considered a marital asset. If they have POA in place then I wouldn't add them to your savings accounts, or maybe just a small one say, £2-3k to perhaps cover immediate needs in a emergency like a hospital stay.

My only thought would be that it may be seen as deliberately depriving yourself of assets so you don't have to pay for a care home.

Definitely going to pay for my own care, this is what the money is ear marked for. I did it with my mum and step father and it made life much easier for me.

I agree with Clockpic, if you are not meeting the IHT threshold then how are you going to meet care needs when a place in a care home costs £50k or more per year?

I guess which IHT threshold? Do you have a £325k threshold ? (no house and no spousal exemption inherited?). Or a £500k threshold? (house but still not spousal exemption inherited).

Obviously if your children are on your joint accounts then it might affect things like benefits for them should they need to rely on that down the line.

"Top notch" care will be a lot more than £50k pa.

I would never have a joint account. Plus deprivation of assets to consider. My mates Mother's home costs 1.1k per week. The level for assistance is very high and she is not deemed to need nursing care. Only 10% of people go in to residential care

My friend had a ‘model’ DH until he ran off with another woman after 30 years of marriage. No way would I mix money if my child was married as it could end up part of a divorce settlement.

Given you have PoA arranged is it really necessary? They should be able to access the money as soon as it is needed. Am I perhaps missing something?

Another potential downside of your plan is that your children may have to include all your savings (or their half) in their tax returns and could end up being taxed on them.

PoA ends on death