How to logically explain to an 89 year old stubborn man not to give almost half a million to hiss adult grandchildren

[Rictasmorticia]

i have been approached my his DIL for help in how to explain to him why this is a bad idea.

He is a self made man, a widower and lives in luxury apartment on a complex with facilities . Presently he is almost fully independent but fears he may have the beginnings of dementia. 5 years ago, on the death of his wife he gave £100,000 to his DD and DS and £50,000 to each of his 4 GC. They were all in their 20s at the time and each of them have been extremely sensible with the money.

This money represents every thing he has except for the property. The son and daughter want him to keep the money for himself. Their view is that if he does need care it will buy him the very best.

He has always acted the Patriarch and thinks he knows best and can be quite pig headed.

What they are looking for is facts and figures that they can present to him.

You can get a brochure from a care home with costs relating to whether he wants to stay in the area which I suspect he will. Care homes are very expensive and there are no half price ones. The price you show him is the price of a care home.

On average people live in care homes for 12-18 months but my late Mum was in one for 1 month and my late Father for nearly 4 years. I am thinking he is one of those people who think he will last forever with good health until he passes an away in his sleep. That very rarely happens and both my parents had everything thrown at them health wise despite being ready to go much earlier. Mum was crying with pain and just wanted to die. In the end a sensible conversation with a Dr made sure her last few weeks were at least comfortable and gave her at least some dignity.

The biggest issue is deprivation of assets as he is a very elderly gentleman - unless he can fund himself then options may be limited and social services won’t pay if he has given away this amount when very elderly - I had to explain this to my 86 year old father in law who was very keen to give plenty away - instead he now helps out our son. Car repairs stuff, rent deposits etc - £1200 or so here and there -

Two things.

One, though please double check this - the vast majority of people don’t end up in care homes. But of course he might end up needing care at home.

Ia he doing this as some kind of dodge against paying for his own care, do you think?

Look up care homes near him at both ends of the spectrum - the cheap ones and the so-called luxury ones and show him their brochures and fees.

You can also show him fees for daily and live in carers.

And warn him of deprivation of assets too (link already posted by someone) - local authorities are so hard up now they've even pursuing children and grandchildren for legitimate gifts of money made over 7 years ago.

You could also encourage him to see a solicitor about sorting power of attorney, livings wills etc and a financial manager for estate planning who will all tell him the facts and help him take the best course of action for himself.

Ultimately, while he has capacity it's his choice.

The problem is that nobody can really tell how long he will live. The good health and independence will hopefully be for a lot longer yet. Ideally, when his health deteriorates it would be better if he can stay where he is as he has so many friends on the complex. Carers are very expensive and that is the concern of the family. In addition there is no guarantee that service charges won’t rise substantially. I don’t think any of these things are on his radar, even though he paid for his wife’s carers in the last two years of her life.

All his money has been earned from his own hard work, frugality and careful investments. They want him to enjoy the fruits of his labour.

Could he give them half of it (£250k) as a compromise, so that he has a comfortable 2 years worth of care left in the bank. My friend's mum had dementia, so she needed round the clock care and her fees were just over £2k a week (£110k per year).
Make sure that the grandchildren put 40% aside, or have the funds available if he dies within 7 years of gifting the money, for any of it that are over the IHT threshold. It won't be all of it, depends on the value of his property.

The most sensible thing his children could do would be to encourage him to seek independent legal advice. A much better plan than asking MN for facts and figures. For a few hundred quid he could better understand the pros and cons of his proposal. If he still decides to go ahead, at least they’ll know that he’s going into it with his eyes open.

Oh that's true, I hadn't taken the house into consideration. But does HE know this is how it works?

Can’t he just give it to them and they don’t spend it, but invest it until it’s certain it won’t be needed
?

He does have a financial adviser, who set up wills and PoA some years ago. When the DiL spoke to me I suggested that she got him to speak to the FA before he did anything.

you can't explain something if he doesn't want to understand. It may be ok, it might not be. All you can do is give him some information on deprivation of assets.

Care home fees can be £100k per year. If he needs a care home because of memory loss rather than physical deterioration, then he might live 4 or 5 years and burn through £500k.

Thanks, that the sort of simple information that might make he see sense.

They’ll have to pay it back if he does have dementia and needs care - it’ll be seen as deprivation of assets

So the issues is not 'it's a bad idea to give X amount of money to his grandchildren', the issue is 'it's a bad idea to not have money aside for potential care'

With things like this, whatever you do lead with why it's a good idea to have the money aside for care. Do not come from a place of what he shouldn't do, it's all about what he should do and why it is such good idea to do it. Maybe don't even mention money for the grandkids, just focus on him being lucky to have the resources so he can have contingency if he needs care. Which hopefully he won't need, but it's a great idea to have it there.

If you lead with a negative, people just become defensive and feel offended you think they are wrong - arguing from a point of view of 'doing this other thing is a great idea' is much more convincing.

Quite apart from the deprivation of assets issue...

Isn't it the case that, if he were to give the money away, he would have to live for at least 7 years - otherwise the gifts would be subject to tax?

https://www.gov.uk/inheritance-tax/gifts

@Echobelly Thank you so much, that is exactly the advice I was looking for. I understand posters saying this is not the best way to get advice. I disagree, MN Is ordinary people who possible have been in the same situation and know what works

The estate would be subject to IHT and gifts within the timeframe would be added back when calculating that tax. But the estate would also be liable for that tax if he doesn’t gift it.

He has a house to sell too.

How much equity is in the house OP?

I think I will advise her to put it to him that “surely when the time comes you would want to stay where you are?” Then show him some figures.. if she keeps it simple without any negativity it might persuade him.

The GC are extremely fond of him and I am sure they will all add their voiced to try to keep him where he is.

The only thing I would be wary off is if the “luxury flat “ is a retirement home as they are a bitch to sell and rarely get back what you pay for them plus the estate has to often pay huge service charges and other fees

The care homes we are currently visiting for a friend’s DF are quoting between £1.9k and £2k per week for Altzeimers care.

We felt we had found the right place for him and stumbled when they said we had to evidence at least two years worth of fees in the bank.

My friend is planning on selling his DF house to pay his fees. The value of that amounts to approx two years worth of fees but he has nothing else. Hence we cant evidence the £200k necessary for him to go there.

Discussing the issue with social services they have advised that they dont support people being in a home and want him to stay where he is with a 4 times a day care package. This is despite the fact that the Ambulance and Police have been called numerous times by neighbours in the last two months because he is wandering around in the garden at 3am - 4am in the morning, half dressed in the freezing cold.

I would say that rather than giving away the cash that will give your 89 year old stubborn man freedom of choice about his care options, he should hang onto it and pass money to the DGC (or whoever he chooses) once he no longer needs any potential care.

My relative has dementia and been in care homes for over 10 years
They're now mid 90s and still going strong

Let him make his own choices. Unless he is not of sound mind, it isn’t up to anyone else to choose for him or convince him of anything. Why infantilise him because he is 89? They don’t have to spend the money, why not take it and put it in a separate account which will gain interest, and if he does need any back or to pay for care home then they can pay for it.

Does he have income? Elderly people with good pensions and investment income may be able to cover a huge proportion of fees themselves. Some are getting richer every month as living expenses drop and income remains high.

Can his ds and dd not agree to put a proportion of their gift in a savings account to be ringfence for care if needed? They wouldn’t be worse off than they are now apart from they would need to declare the interest for tax.