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?

Totally agree with this. If he’s already been formally diagnosed with Alzheimer’s and has not stated this intention to gift money for school fees anywhere, then you won’t be able to do this, even if you have LPA.

Even if you do end up being made to paying it back, at least he has fulfilled his ambition that he saved hard for. I know that sounds duplicitous and it isn’t meant to be, it’s meant to be a kindness.

I think everyone advising you has been there and experienced care or arguments about care.

If parents don’t have enough funds people even end up topping their parents money out of their own pocket as they don’t want them to go to some dreadful place that is on the social services list and probably cheaper eg costs them £600 per week instead of £800 etc.

Even if you get funded care at home it’s pitiful outside a care home.

In regards to my mother, my dad paid for her care home - it was £750 per week 14 years ago. My dad had funded care as he had cancer but it was pitiful of fleeting visits lasting about 15 minutes providing his breakfast at 6 am when he was asleep or lunch at 11am. We all cared for him and paid his cleaner and her friend to look after him for periods we could not cover. That worked out about £100 per week… that was with CHC funded care in home! Social care will be the same. It’s inadequate.

Even using the money but then repaying it is construed as a gift unless you pay back interest at say currently 4.5% or 5%.

Your dad will need all his money for his care or you have to set it aside. Unless you intend to care for him there will be a period at home when he needs a little bit more support eg to shop, clean, go out to a memory cafe or Alzheimer choir etc.

His best interests are important here.

If your dad had hundreds of thousands in savings and a decent house I would definitely say go ahead but he does not have much money. So if you intend to pursue this you really need to put money mentally aside for him for when the day comes and he needs support to be happy at home.

He can play a part in so many other ways. For me, seeing my dad at my daughter’s drama performance was a gift as he was often in too much pain to attend. Gifts are not just money. He can gift smaller things eg pay for meals out with him, you and your kids to make memories.

if there is a surplus you will get it when he dies. For now, focus on making memories with him.

I am taking on board everyone's advice. Thank you.
I think it as someone commented, he thinks £50k is worth much more than it actually is in today's climate.
I'm thinking maybe I'll let him contribute something like £1000 ( he is very insistent) as he will consider this to be a real help. If it comes down to it we can then return the money.
We have the POA etc set up. He was an accountant and is very protective over his money. No way will I be able to take control of anything to do with his finances until he has much less capacity. I actually don't even know if £50k is the full amount of his savings. He has money in various places and it is very difficult to talk to him about it. So that's another nightmare that we will have to sort out.

Could he contribute 3k to a child ISA to grow a university pot/house deposit? That way he would feel he is also contributing to the child’s future.

I think there's a tax benefit to grandparents paying fees but not sure

OP

If he gives anything over £3k a year and dies within 7 years, it's taxable.

Don't you think he should hang on to his money in case he needs to go into a care home?

It’s not taxable if it’s out of income. I believe there’s also an exemption for school fees

as for whether o/p thinks he should hang on to his money. He’s competent. It is entirely his decision how and whether he spends his money now or saves it for care. If there is a POA that still does not give anyone any day in how the money is spent or given, and preventing a competent person doing as they wish with their finances breaches the POA.

if he wants to give away his money, he can. No one can predict the future and if it gives him joy now to see his family benefit then I would let him. After all he may never need it for care and then what?

i know one case where an elderly person was being made to save for the future against their wishes. Opg got involved and the POA was withdrawn.

It sounds like he certainly won't be allowed to spend his money on himself as you have other plans for his money.

If there is it should be abolished!

I think the OP is just well aware of how much care and day to day help her dad will need and what it will cost him. It's very common for the elderly to stint on paying for help, even with suff like cleaning and gardening, and try to rely on unpaid help from family however impractical that is.

I’m not sure how you can make a comment like this?

There are two things

1 you can make an undefined number of small gifts of £250 out of capital but not on the same person,

yoy can also make a gift of £3000 per annum

2 You can also give away money from annual income if you can prove it surplus to requirements and not needed to cover living expenses.

But I’m not currently trained so don’t rely on anything I say.

However this relates to IHT and not social care and deprivation of assets.

🤨 we’re talking care home fees not IHT.

deprevation of asset has nowt to do with tax or IHT. There’s no lower limits re deprevation of assets if you’ve got about the savings limits.

Here is age uk guidance on what is deemed as deprivation of assets with case examples. it’s guidance really as it comes down to individual cases.

do you or dad have anything documented anywhere to say it was his intent whatever happened to pay for schooling? If so you’re on reasonable ground to say he’s not doing it to deprive assets from his care funding deliberately.

without anything documented, or prior payments having been made for this prior to his diagnosis you’re both on more shakier grounds.

https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs40_deprivation_of_assets_in_social_care_fcs.pdf

id also be careful about his mental competency to make a decision to pay for care. As his POA (when it’s in acted) you are obliged by law to act in his best interest , which means protecting his assets to support HIS needs as a priority, and in effect doing nothing unless doing nothing will put those assets at risk eg. You should not make decisions to suddenly invest savings in stocks and shares in ways he didn’t used to do just because you think he could be wealthier, even selling a house prior to it being needed for care fees is often not seen as best interest.

If he starts to make this payment now, you need to be damned sure he has mental capacity to make that as informed choice given his diagnosis and long term care needs. Same as he would need mental capability to change his will at this stage. It may be worth asking a solcitor to get involved, to draw it up legally so no questions can be raised later re you assuming POA when needed, and the solicitor can do a mental competency check at same time, discretely and respectfully.

I know this as my dad wanted to change his will in earlier stage of dementia. Solicitors came, weren’t happy that he was fully mentally competent and didn’t take it back to him for signing. They wrote it all out to keep him “happy” (and them paid 🤣🤣), so he thinks he changed his will. We’ll probably go with what he put in that unsigned will as deed of variation, so it matters not, but just to show that solicitors will be very careful about it.

all the stuff about IHT and tax allowances, is not the point here. That only comes into play after he has died. It may affect the amount you maximise taking form him for this education fund, it that’s it really. Remember at end of day, IHT is completely irrelevant anyway if he has assets less than £500k inc property (or £1m if he was married and his spouse predecessed him). If he needs care there is every possibility he’ll be well below IHT limits when he dies, so all this talk of £3000 limits is entirely irrelevant.