Gifting of money vs deprivation of assets

[ChristmasLightsLover]

Please can someone suggest a good advisor - not sure if it should be legal or financial - to talk with about gifting money and avoiding deprivation of assets issues?

This feels like a minefield. We aren't sure on how to best go about this and want to get our ducks lined up.

If you've had experience please do tell me on what to look out for! Thank you.

https://moneyfactscompare.co.uk/savings-accounts/guides/how-much-can-i-give-as-a-cash-gift-and-how-is-tax-affected/

Useful article on what you can and can’t give.

That article is all about gifting within IHT rules. I can’t see that it says anything about deprivation of assets.

One easily missed area of gifting is that of gifting regular amounts that come out of excess income?

For example, parents receive £4000 PCM in pension, they could give you £500 every month as long as that is from income that is leftover that they don’t need. But they have to do every month it can’t be one off amounts

This article is more relevant to deprivation of assets.

The fact you are talking about an advisor suggests you are considering a large gift outside normal spending patterns. Th LA will certainly be interested in this.

Financial advisor is probably what you want, but ask around and make sure you have one who is genned up on deprivation of assets and not just trying to minimise IHT

That’s IHT rules again. Not sure it would escape deprivation of assets rulings.

But couldn’t gifting of large money be seen as deprivation of assets?

AgeUK has a good information page on their website.

Basically if you give away money / assets when there is not yet any indication that the donor needs care, and do not give away assets for the purpose of avoiding care fees you are ok. So a fit and healthy (albeit older / old) person giving money to offspring for a house deposit, car , school fees, new roof etc is ok.

I wanted to know I could have a choice of home for my parents, or that they had enough savings / equity to pay for good care at home. Peace of mind.

I have a financial advisor as I got a lump sum when my husband died. He said to keep at least £85K for possible care costs in the future.

The key point is should your parents need care do they have enough to fund it?

I wonder how he came up with that figure? About 18months residential care assuming you haven’t taken a huge chunk out for domiciliary care beforehand

@MereDintofPandiculation I am very fortunate and do have a small Teacher's pension, as well as a pension from my late husband. This income is included in my 'care' costs as it would just about cover the living costs. My husband died when I was 59, it was a great shock to me I had to wait seven years for my State pension, I almost wished my life away and spent most of our savings waiting for it. I am glad to say I was 66 in April.

There was a new Bill being discussed at capping care costs at £85K - looks like it has been scrapped. Adult social care charging reform: further details - GOV.UK.

My aunt is just about to go into assisted living at £1500 per month, she doesn't need nursing. She has a small flat that has to be sold to finance her living there. She had lost track of her lease years and unfortunately has just had to spend her life savings of £10K extending the lease.

@Salome61 it was proposed back in 2022 - as a vote winner - but then they never followed it through as they knew full well the country couldn't afford it - in principle I agree totally with that but I think other things have to come alongside it such as an insurance based pay in system at sensible cost to make it remotely affordable- otherwise we will have to have much higher taxation

I think 85k is the max you can have that is protected by the Financial Services compensation scheme. You can have more, but if the bank goes under, you’re only protected up to £85k.

If there is a diagnosis of a life limiting illness you will be on shaky ground regardless of any advice. However, why would you gift money that you need for care? As a self funder, you have more choice.

If you are gifting whilst in robust good health, you can argue gifting was made in good faith. The earlier you gift, the better. Make gifts through IHT403 (keep a record obvs) and use the £3k allowance. Of course as long as you don't die within 7 years, you can go over the £3k allowance, otherwise tax is paid (dependent on size of estate) on a sliding scale. If you're married, use the nil-rate band transfer.

Most of the larger solicitors will have an Estate and Inheritance Planning department. They will look at everything to make sure you get the best, legal solution for your circumstances, including PoAs etc.

Yeah, but you can have up to £85 in as many institutions as you like, so that can't be the reason.

I've found my original email regarding care costs, I am sorry I got mixed up, the £85K was only in reference to the possibility of the actual care costs being capped at that point after three years. The 'living' costs of £20K plus would still have to be paid.

I do have more than £85K saved towards my possible care costs.

The IFA said that 'standard' care costs are £55,000 per annum. My private and state pension would cover some of it, and the additional costs would come from my savings.

It wouldn’t have made much difference to most people - it applied to “care” costs not “board and lodging”, so the limit would have been reached only after about 3 years.

You’re right that some sort of insurance is the way to go.

Either the so-called “death tax” or “dementia tax” would have been a better system.

That would last you just over a year in care

The IFA said that 'standard' care costs are £55,000 per annum. My private and state pension would cover some of it, and the additional costs would come from my savings. If you needed that level of care, you would also be able to claim Attendance Allowance of about £5200 a year. You’d lose the AA once you needed financial help from the LA.

18 months is about the average life expectancy after going into a care home. That's probably the basis for his figure.

That sounds reasonable, but I thought that was nursing home? And that care home was nearly 3 years?

As pp says it’s all about intention. Does it look like a genuine gift to help your kids or does it look like intentionally trying to bring your assets below the threshold for state care.

Obviously your health and finances at the time of the gift will be very relevant to this question. If at the time of the gift the giver is healthy and/or will still have plenty of money after the gift, then it looks more like it’s for genuine gift purposes.
However if at the time of the gift it’s clear the giver will need care at some point and/or they will be left with very little after the gift, it looks much more like intentional deprivation.

When people talk about trying to avoid deprivation of assets and leaving possibly elderly parents with just the £23,000 in savings, do they not think about what you will be offered if you need care versus being able to choose.
If at all possible I would not like to leave someone in this position. But on mumsnet alot of people think it’s a good idea to just let the state pay. Not realising the lack of choice and level of care.

Average life expectancy is 24 months in care homes without nursing and 12 months in those with nursing, according to the British Geriatrics Society.

That probably accounts for the 18 month overall average figure.

My dad's just coming up to 5 years in nursing home. Didn't look as if he'd more than months to live when he went in, now it looks as if he's aiming for 110.