Elderly parent wants to give large amount of money to me - I have refused !

[Orangecurtains]

Elderly parent (90’s) wants to give significant amount of money to me - I have said no as am not in need of it as such ? They are insisting !
What are the implications for myself and parent ?
For context I am not working at the moment due to ill health (my own choice) but do not claim benefits ?
What would you do ? ?

Do you have siblings?

accept

Sane question- do you have siblings? That changes the answer hugely..

Is your parent of sound mind?
Does s/he still have enough to support him or herself?

Also be aware that gifts given within 7 years of death are still subject to 40 percent inheritance tax https://www.gov.uk/inheritance-tax/gifts

Why does she think you need money?

This would cone under the deliberate deprivation of assets rules, if your relative needed care.

If they don’t, or don’t need that money then all is good and they start the seven year clock ticking in terms of IHT, which you may benefit from.

www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/deprivation-of-assets/

Sorry should also say, IHT will still be payable for up to seven years, so you need to make sure that is available.

If you're not claiming benefits... the gift itself is tax free however if you invest it, there may be tax to pay on what that investment earns.

The implications are mostly for your parents in theory... but in reality may become your problem - it's only IHT exempt if they live another seven years... and its never exempt from the LA seeking contributions to care should they need the LA to pay for that.

They can give you 3K a year tax free, each - but after that the above all kicks in.

accept. Maybe it will make your elderly parent happier to see you have the money whilst they’re still alive

@Orangecurtains Your parent should have done this years ago to avoid IHT if that’s why they are giving it. The tax tapers over the 7 years. . If the parent csn still pay care fees, they won’t be chased for giving money away, if the gift is leaving them with very little, they would be chased. So I wouldn’t refuse, I’d talk to them about needs and their tax position.

Take it but put it in a savings account in case.
They are doing some IHT planning (a bit late if in their 90s!)

Say thank you, put it in a savings account and discuss with a financial planner.

good idea to put it into an account in case they need it

Say thank you, take it, and only spend what you REALLY need out of it.

The urge to help your own child is so strong, let your parent help you. As others have said you can stick it in a savings account but it sounds as though they would get an awful lot of comfort from giving you some money, so don't go all Mrs Doyle on them!

I would do the same in yoyr parent's shoes ... but earlier. I will be giving my son £400 per month when I get to state pension age as I don't want to be building savings and money given from "surplus income" on a frequent basis is not subject to tax

Not necessarily. The rules vary council by council. My MIL did this and because the agreement to give the cash was made before she needed care, and was made for a specific purpose, it was not deemed to be "deliberate deprivation".

I think at age in 90s that we can anticipate that care may be needed!

Maybe not up to 70s.

So in the OPs case, it is very relevant.

This is the answer. Put it somewhere safe but know that it's your parent'm oney and they might need it.

I work for an LA that would deem this Deprivation of Assets if your parents dropped below the threshold for LA funding.

If your parents still have a massive amount of money/assets left after gifting some to you then it should be ok. Care Homes are up to £1500 a week each, so assume a possible £75000 per annum each. If each of them needed a care home place for 5 years (extremely unlikely) that would be £750,000. So if their house and savings are more than that it should be ok. BUT they absolutely should talk to a Financial advisor

But the IHT will come from the donor’s estate, I believe, and depends on the £325K threshold?

If it's over £3k and takes your yearly income over tax threshold, then you'll pay tax. As said, deprivation of assessts, further tax implications etc can arise. If you need to claim benefits, it's seen as income. I'd take it and set it aside for now. Without explaining their circumstances, it's difficult to fully answer.

Th first-year they gift they can gift £6k each to you. So you could accept £12k from them that you put away into an ISA or bond and forget it if you don't need it.

Take the money

Especially if you are not claiming benefits

You can put up to a maximum of 20k per person into a tax free ISA per year

You can put up to a maximum of 50k per person into Premium Bonds
All prizes are tax free

I would also suggest that you check your state pension forecast & National Insurance contributions

www.gov.uk/check-national-insurance-record

www.gov.uk/check-state-pension

If the estate is depleted because the gift was too large, then OP will have to pay the IHT.

In addition to this, it’s not just £325, it depends if the donor is married and has property it’s much higher.

I think this is complicated OP - as others have said if they need care at any point and don’t have hundreds and hundreds of thousands in assets and need funding, it could be seen as deprivation of assets - I’m not sure if they could come after you for it , but that may be a possibility - others will know. Then as others have said IHT - now if they are well under the threshold then there isn’t an issue, although you will be taxed on it - however if they are over the threshold and survive less than 7 years then it would be added back in and taxed for IHT.

it would be much safer I feel for them to give you modest sums - ( although I don’t know what amount is proposed) be it £5k a year at your birthday etc .

Accept and if not sure, accept and put in a savings account. Why would you say no then ask for opinions?!