Deprivation of assets: private school fees

[Grasshopper7]

My father has recently been diagnosed with Alzheimer's. He's fine on his own at the moment but will obviously need care moving forward. He has approximately £50k in savings and owns his flat. I am confused about what the rules in terms of how much he is allowed to gift us before he gets down to the £23k threshold.
Specifically he wants to ( this has always been his intention) contribute to DC private school fees.
Is a gift of something like £3k each year likely to be considered deprivation of assets?

If you can afford it, let him contribute and put away the equivalent in savings so that you can cover his costs if the council do judge it deprivation, or if you think he needs it later.

Depending on the rate of decline, your dad might have several.years ahead of him where he is able to live at home with support from care workers. Those fees need to be paid for out of his £50k savings. The fact he owns his own house is irrelevant unless he goes into a care home.

He really can't afford to contribute towards school fees, even without a dementia diagnosis.

a similar example- if you want to pay school fees in addition to the £3K per year allowance then to avoid IHT this money must come from excess income, not from savings. When my dm died I had to fill out IHT 400 with her normal expenditure and income to show this excess and how it was used to support my DD’s education.
with your father’s situation it may be that the contribution would also need to come from excess income rather than savings. Paying from savings could be seen as deprivation of assets.

I am fairly sure paying granchildrens school fees are acceptable expenses.

i would get legal and financial advice and get an agreement drawn up now, while he’s still completely competent and able to express his wishes.

however 3k, or even 7k, or even 50k won’t touch the sides of private school expenses. You’re looking at 30k per child per year, plus uniforms, trips, extracurriculars, and all the other stuff that comes with it.

Let him pay, keep details of your conversations and if you are questioned over it explain as you have here, with as much evidence you can gather. If you are then told it wasn’t on, then pay him back. Someone could spend a decade or more cannily shedding their assets in order to avoid fees and in that vein I don’t understand how a person how has lived frugally in order to afford their grandchildren a sought after education should then be told that no, they should pay their own care as they are disposing their assets on purpose to avoid fees. It is just poor timing.
I am sorry for your Fathers diagnosis, it’s a terrible disease

This !

Lots of day schools are around half that. In fact according to the independent schools council average fees are just over £16k per annum.

OP if you can afford it anyhow just let him do it - worst that can happen is that you will have to stump up the care fees. We kept my mum home with dementia by the way. Not everyone ends up in a home. If his money is the difference between going or not then you have a more difficult decision.

Some good advice here. I always advise proportional gifts but as PPs have said, he’s not really wealthy enough to make any significant contribution to fees. Just make sure your dad makes any gifts himself while he has capacity. LPA cannot be used for something like this as it is not in your dads best interests and unless he has specified the gifts can be made in the lpa, you would be acting against the rules.

Please let him keep his money to pay for a reasonable supported lifestyle whilst he can still enjoy it? Wouldn’t that be the priority? Like others say if he wants to stay in his own home as long as feasible that costs. Quality care does cost. Be under no illusion. It looks dodgy even if it isn’t intended that you are setting up new gifting arrangements after his diagnosis. Capacity?

Thanks for all the advice. He doesn't want to spend the money on himself. I wish he would.
He has capacity and this is what he wants to spend the money on.
The idea of letting him pay and keeping the money aside ourselves is a good one. We may do that.
At what point do they start to look into how the money had been spent? If it is when everything including the proceeds from the sale of his flat has been spent, we may have a long road in front of us anyway

Honestly get good financial planning/legal advice.

this can be a minefield, and now he has an Alzheimer’s diagnosis it gets more complicated as clearly he may need care at some point, he may not.

get everything drawn up properly and advised as to what you can and can’t do.

Deprivation of assets only comes into play when the person has run out of money.

So say the person goes under a bus in a few years time. No issues.

Say he goes into a care home but dies before he runs out of money. No issues.

The issues come at the point where he needs care (usually a care home) and has spent all his money. At that point he (you) apply to the local authority to pay his care costs.

That's when the local authority start looking into what his money was spent on. If it was all spent on the care, fine no problem they'll fund him. If not then they may decide that he still has "notional capital" which he has actually spent.

At which point you will need to go to court to fight it out.

So it's a risk some people are prepared to take.

The thong with dementia is the speed if progression varies so much. My mum was diagnosed 4 years ago but still lives at home with just a weekly cleaner and someone checking on her daily. My friends mum, who was diagnosed at the same time & seemed about the same level the, needed to go into a home 18 months later.

To add to what countrygirl99 says, his age will make a difference. If he's in his 90s, he is likely to die with Alzheimer's rather than of Alzheimer's. If he is in his 70s then it's more likely to be the Alzheimer's that kills him and he is more likely to need to go into a care home later.

I think if he's only got £50K of savings then it's probably a case of him not realising the impact of inflation and thinking it's a lot more money than it actually is. We've had this with MIL as well, she is in her late 80s and she has no idea what some things cost anymore so, e.g. she can't really understand why none of her grandchildren have gone to private school when every previous generation did. And like your father she wants to 'help' us pay for things despite us having many multiples of her income and more savings, we just keep telling her no, we don't need your help.

What is the primary motivation then?
What could make a difference is whether he has already regularly contributed to school fees or not. If he has, he could argue that he’s continuing to do so as normal.
The other thing to take into consideration is the equity held in his home. I’d suggest that he completes a POA application asap to enable someone to sell his home if he ever gets to the point of needing residential care. At that point, he may well lack capacity to be able to sell it himself. The issue over DOA at the moment would be if he needed carers at home that would have to be paid for.

A financial assessment is carried out at the point where any paid for care is needed. The assessor can ask for evidence going back a number of years, especially if they suspect DOA. For example, if he regularly underspends each month, this will show on his bank statements and they may query the whereabouts of the savings.

You Are already on notice that due to Alzheimer’s he is likely to need care - that’s almost guaranteed.

He has very limited funds

Care costs are approximately £60,000 to 100,000 plus per annum so how much is the flat worth?

Before it comes to that, he might need to buy in care eg cleaner, PA to take home out, taxi fares etc. This is really common place. Also expensive at about £20 per hour for a PA or if agency £35 per hour. Not having funds could restrict his life at the pre care home period.

If he can’t afford his own care costs when the time comes he will be placed by Local Authority - he might hit jackpot and be placed somewhere nice but he equally might be placed somewhere unpleasant.

If he can afford to choose his placement and be there for a good while this means that there could be a strong argument to keep him there when eventually he runs out of funds. He has got himself through the door so to speak

Average time in care homes is 3 years but for instance someone I know is now aged 96 with dementia on their sixth year. The family set aside one million before distributing funds and it’s looking close now.

Most people are refused CHC funding so it will be social care and payable.

People who do distribute funds tend to do a rough calculation and work out say the cost of say 5 or 6 years care or even more and decide if there is a surplus. But even that is a gamble.

As he has Alzheimer that also opens a can of worms about capacity to make a decision to gift and financial abuse etc. I would be worried about ensuring you have medical evidence that he has capacity or sorting out a POA whilst he does for money and health - you should get that done anyway as getting a deputyship is lengthy and it’s more onerous.

Also do you have siblings - that could be another can of worms.

The local authority can go back years

Personally I would not take his money as he is going to need it. If you can afford it then pay the school fees yourself and if he leaves money when he dies there will be an inheritance.

I would not want my parent at the behest or mercy of the local authority or having an argument about whether he should or should not be moved from a nicer care home. At this stage, every penny counts unless his flat is worth over a million etc. or a lot of money.

Would you not rather he spent as much of his own money on his own care OP? Trying to ensure quality of life? Maybe he has his own plans with the 50k to enjoy what he has left?

How can you prove it has always been his intention?

The fact that it won’t be starting until after he has been diagnosed will make it very difficult to argue anything other than deprivation of assets

Also to note that for instance social care in home funded by social services will be shockingly low eg a few 30 minute visits and not eg a PA to take him to the gym or for a day out etc. Having money gives him options to do things eg day trips and have a cleaner home etc. Also a choice of PA or agency is important as they all vary.

£50 k in savings is really not that much. Assuming that the flat is not worth up to or over £500,000 there is unlikely to be any IHT. So not much benefit in distributing assets earlier.

As it is there could be a chance that you might have to pay top ups for care to keep him somewhere good which many families end up doing.

His needs have changed, that happens in life.

Any person with savings who has plans for them should be aware the plans may have to change if they get a diagnosis.

I'm sorry your Dad has Alzheimer's

I am sorry your Dad has received this diagnosis, it’s very tough.

Given that his savings are not huge, and ultimately will not make a huge dent in your child’s school fees ( 6 years at average £16k plus extras), I would definitely be saving any money he gives you to one side, to enable you to filter that back to him if a) he needs it or b) SS get into it.

Keep good records of all gifts he makes to you. Given that sadly, his diagnosis has come just before he intended to gift you the money, and that you ultimately have POA, it’s important that you can show clearly what his money has been spent on.

The road may not be as long as you think. A place is a care home can easily cost more than £1000 a week. So his savings will be gone in a year or less.

On another note if he has capacity now get the Power of Attorney for both financial and health sorted now while he can still agree to it. Makes it much easier in the long run.

OP very rarely does someone with dementia go from living independently with no care to living in a care home. Most people stay at home with visiting care workers once they can't manage independently, and that can go on for a few years before needing to move to a care home.

If in the next year or so your dad needs care visits, these will be around £25 - £30 per hour. Say your dad needs help in the morning and evening for meals and personal care, even if its just 30 minute calls, that's potentially £30 per day, £150 per week, £7,800 a year. As his care needs increase, those costs might double.

He really can't afford to contribute towards school fees.

Another thing re keeping his money for potental care needs - it's not just where/how much, it's when and what. Social services won't fund someone to clean/shop/do admin/gardening etc, just personal care. So if he wants to stay in his own home someone has to do that or buy it in ( and it can be a massive burden to do it yourself as well as run your own family and home). Social services won't fund a care home until he really isn't coping with 4 visits a day ( and that's a high bar to jump over) but that might mean he is own his own most of the day and lonely/scared so he may end up preferring to go into a home over sitting in his shit until the next care/family visit, but he would need to fund that.
Sorry to put it so bluntly but I'm on my 4th t shirt for elder care