To ask how much you can be gifted by elderly relative?

[JumpingDizzy]

An elderly relative sold his home and gave my db 50k. Now the man is close to going in a home. He has savings (over 100k) but I'm wondering if the gift will be queried? Db thinks not. He hasn't used it all but he'll be in for a shock if he has to claw it back to pay care home fees.

Amy advice welcome. TIA

I think it depends on how long ago it was gifted?

I believe it's not a straight-forward issue. Basically, there is no limit but depending on how far back the financial assessment looks, these money can still be considered part of existing assets. Sounds like you may need to have a chat with a solicitor

Yes the gift will be queried.

If (when) he runs out of money to pay for the care home then it is the responsibility of the local authority.

They are fully used to families trying to get the local authority to pay for car homes while preserving family wealth and will look into his circumstances.

The phrase you are looking for is "deprivation of assets".

Might also be tax implications, as there is a limit of how much you can gift so might be capital gains and depending if relative dies within 7 years inheritance tax

There are limits on tax free gifts and Inheritance Tax liability if made within 7 years of death. I don't think there is a specific limit for deprivation of asset purposes but if it is suspected that that was the reasoning the LA can refuse to contribute towards care costs.

There are rules around gifts - so for example if a elderly relative is regularly giving Christmas or birthday gifts to relatives these do not fall within deprivation of assets, although I think there might be a limit.

£100K will pay for approximately 2 years in a care home. Longer if there is also a decent private pension. He needs to make sure the money is invested somewhere so he can get decent interest on it. His actual income will also be taken into account when a financial assessment is made.
For example, fees = £1000k a week, pensions total £400 a week. So he will use £600 a week of his savings plus his pension, each week. That will use up £32k of his savings over a year leaving him with £68k savings. Year 2 will see the same reduction, ie another £32k and savings balance of £36k. During year 3, his savings will fall below the self funding threshold of £24k. At that point, deprivation of assets will come into play. Obviously if he only has a State pension of £200 a week, the point at which his savings fall below £24k will come sooner. The assumption will be that he still has access to that money.

I have a feeling it's £3000 per year unless longer than 7 years ago.

You’re right, but you have to show that you regularly gave gifts of £X.

They went back seven years with DM. £100,000 won't even cover two years care.

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

I think it is 2 distinct issues- inheritance tax for which there is a 7 year rule with exceptions for gifts that are regular and affordable, but separately the deprivation of assets which is do to with the cate home fees. For mist people
it is deprivation of assets that is the key concern. I am interested in this too….

Google "deprivation of assets "

The regular and affordable refers to income of the gifter. For example I gift £3k each year split between my 3dc. They get 2 payments of £500 each. I can't gift more because £3k each year is the limit.

Anything else I gift has the 7 year rule attached, so if I died within 7 years IT would have to be paid.

Deprivation of assets is when like your Granddad has gifted your brother £50k before he goes into a care home. Your Granddad will probably pay on average £4k pcm in a care home. So it would last approximately 2 years. If he is over pension age his old aged pension would be paid towards these fees. Before his finds dropped down to approximately £23k the council would do an funding assessment. At this point they'd look at his money/assets/property etc over last 7-10 years or so. It is at this point they would at point at which gift was given. The closer the gift was given to the date he looked into going into care the more likely it would be declared as deprivation of assets. If it was 4 or 5 years before he thought height need care he might be ok, depending on council. A council can go back up to 10 years but many seem to stick to 7 years.

Thank you I'll pass this information on. It wasn't 7 years ago. Think it was 3?

This!

So many posters are getting the waters muddied between

a) Inheritance Tax
and
b) Deprivation of assets

They are two distinctly different things.

@JumpingDizzy Inheritance Tax will affect those who inherit, ie your DB and/or others. It won't be an issue for the relative who gave him the money as he won't be around anymore.

Deprivation of assets will only (directly) affect the Relative.