MIL transferring money to DH against future care home costs

[DisgruntledofTunbridge]

Just wanted to run this past people who might have been in a similar situation.

Sadly, DH's dad has been diagnosed with dementia. He's still at a stage where he's basically ok (ish) but occasionally making mistakes with things and was going online and making big purchases that he then forgot about completely. (MIL took away his ability to do this by closing his/their eBay account. Not sure he's noticed yet TBH.) He doesn't drive any more. MIL already transferred a fairly lumpy lump sum to DH for 'funeral expenses' (they are quite traditional) basically to safeguard it from being drained by FIL (should he decide to revert to online shopping again) and that's now in an ISA for them, that DH set up.

Today, MIL did this again - she'd been talking to friends or relatives who had found themselves having to pay for a care home for one of them, because their savings were over the threshold. MIL promptly sent another few grand to DH to 'safeguard' in case care home expenses were needed her end. I gather she did the same with SIL.

I mean, obviously this is all really sad. There's no plan, nothing has been discussed with DH or SIL, they just keep on being given sums of money to safeguard for eventualities.

With my less-involved hat on, I just wondered if there's a disadvantage for DH/us? Is it taxable? As far as I know, on paper it's a 'gift' (except one he's looking after for them). We know about duties payable on gifts of money if both DH's parents pass away in the next 7 years, but are there any other considerations?

Oh, and DH/SIL don't have POA. It was suggested by my mother-in-law a year or two ago and they got a certain way down that track, but then FIL got a bit windy about it and decided he didn't want to proceed because he'd lose control of his money...

(I mean, I say there's no plan, but it feels well thought through compared with the head-in-sand from my own parents who are comparable age and probably into the dementia zone (dad) as well... But just for once I'm concerned about DH's parents, rather than mine!)

Care homes can go back as long as they choose to when checking deliberate deprivation

planning for funeral costs,
3K per year gifting
all fine.
just because he’s diagnosed doesn’t mean all the customary gifting (birthday money, holiday spending etc.) goes on hold for 7+ yrs till the grim reaper and probate.
just consult a lawyer briefly to clarify.

Do they have a joint bank account ? I think if shared, 50% of the total is assessed when it comes to paying fees for one person. She would be better to separate the money, and let her husband's money pay for the house bills etc, as that will start dwindling down naturally. Husband does need to be careful here though.

As he's only just started his journey of dementia, he may be at home for some years yet.

The person you’re referring to may have complex health needs which are paid for through Continuing Health care funding which is not means tested so a person can be a millionaire and eligible.

I’m assuming it’s £4k for each funeral. Then £3k to DH and another £3k to SIL and that more payments will be forthcoming. So it’s likely about £10k now and growing.

You need to explain the reality to MIL but it will likely go in one ear and out the other, and she may just continue but give it all to SIL to look after - and if SIL spends it there will be a big problem and maybe you and your husband will have to pay for the care if SIL can’t.

The council will definitely review the bank statements if any care is needed, even care and expenses for things in FILs own home. And they will go back as far as they want, but always to at least FILs dementia diagnosis. Any gifts after this date (and often before this date if they feel that you should have been able to foresee future care needs), will be considered as savings that FIL and MIL have and the council will refuse to pay for the care if the savings (including those given away) are over their specific threshold. So keep all of that money safe as it will likely be needed back by MIL.

On a positive note I suggest that MIL should use the funeral money to buy a funeral plan, i.e. pay for their funerals now. That is not deprivation of assets.

If FIL gets himself sectioned and then ends up in CHC this is true, it happened to my father after he wandered off and subsequently got picked up by the police.

Yes I know. Because their name is on the account. Just pointing out that funds in the name of a spouse cannot be included.

The £3k for gifts is the total amount they can give away rather than how much they can give to multiple people. So if your DH and your SIL each got £3k, that would be ok as long as his father was doing one payment to one person and his mother doing one payment to another (coming from a shared bank account is fine).

The way the self funding threshold works is this:

If the person who needs the care has over 23k ish they pay for their own care (at home or in a care home)

Any money in the sole name of the person needing care is counted as theirs.

Half of any joint account is counted as theirs.

Any money in the sole name of another person (even their husband or wife) is not considered.

If a person has between 14-23k ish the amount they have over 14k is counted as income which can be used to contribute to care (so for every £250 they have the council consider them having £1 per week). Anything under 14k is ignored completely.

Giving away money that belongs to a person who can reasonably expect they will need care in future can be deliberate deprivation of assets and the council can claw that back.

Small gifts, in line with what the person has always done, would not be deprivation of assets.

If a person needing care in a care home has a private pension - half of this should be able to be kept by the person who remains at home but any other income (bar about £30 a week) would be used towards the cost of care (if under the self funding threshold).

Things that are sensible to do!

Split joint accounts in half now and put the money in sole names. (Imagine you have 100k in a joint account, that is 50k each but over the funding threshold, you would have to keep paying until the joint account got down to 46k, meaning the 2 people would have 23k each. If you split it then the person who needs the care has to pay until they get down to 23k, but the other persons 50k remains safe in their own account).

Use the account of the person needing care to pay any of their expenses.

Consider looking at moving house ownership to tenants in common - then each person leaves their house to children. This protects half the value of the home if one person goes into care and the other person dies, or the whole value of the house if the person in care dies first.

Get POA!

The tax issues around gifting money are separate and don't count for anything related to care. They're just the same for anyone giving cash gifts.

I get what you're saying but £3k surely isn't deprivation of assets? It's barely 2 weeks care home fees!

Can I also say, if the local authority is paying for care then the quality and quantity of care is unlikely to be as good as private care would be. La are likely to try to keep someone at home with carer visits when residential care might be better for them and for their spouse. And our la care homes round here are a lot less comfortable, less well staffed and offer less good quality of life than private ones.

@DisgruntledofTunbridge The most important priority is to get LPAs asap. If FIL won’t do his get MIL to do hers. Martin Lewis says LPAs are more important than wills.

the most relevant question is how much money is in their bank accounts to start with. If their main savings are 10-20k then they will not be self funding for very long any way.

if they have a few hundred k in the bank and transfer 3k each week then this will cause a problem.

No, they didn’t. Just old.

Giving away money to put it out of reach of care home fees is unlawful and the money will be treated by the council as still being your parents’ money. They can (and do) sue your parents for the money if one of them ends up in a care home. There is no time limit on this - if it appears that the reason for the transfer was to put it out of reach for care home fees purposes, the council can sue for it back. AI can tell you this.

3K a year is fine and doesn’t hit the threshold for govt interest re. deprivation of assets, whatever the intention behind it. You’re fine.

If she's wanting to hide money it's got to be done in small cash amounts over a longer period of time. No way would SS not see right through what she's currently doing.

If he needs care and has money then surely that money is for that care?

You need to get going with the POA again especially as FIl is starting to show signs and he has to be of sound mind when he signs it.

make sure he knows nothing happens with it until it’s needed. It just sits in a box waiting and he can override it at any time you are not suddenly going to start controlling his money and spending it all.

As for the money she’s giving you, keep accurate records of dates and values and if it isn’t going to impact you in any way just squirrel it away in a separate account, so it’s there if it’s needed. That way mil thinks she’s doing the right thing for the moment and you still have it as fall back in case. I agree with pp that the amounts are too small to consider deprivation but definitely don’t spend it.

you may also need to put it on the iht 400 as gifts when the time comes.

So if a LA was asked to find a care home space for someone and asked to pay, presumably the LA would legally be able to look at that applicant's bank statement for recent withdrawals and transfers? I can't see why they wouldn't, or wouldn't be entitled to that information.

Yes they would. I used to work for the LA and they have a team of very good lawyers for this reason and they wont let it go because its the law- its deprivation of assets.

She had a reasonable expectation after her diagnosis that she would require care and so her transferring it now is very obvious she is trying to get out of paying. They will pursue it.

As you say, if it was that easy then everyone would be doing it.

Yes it's deprivation of assets. You can gift 3k a year to a person, but with father diagnosed it would be considered blatant moving of assets in order for the council to bear specialist care costs at an earlier date.

Tbh moving a few thousand is a drop in the ocean in terms of care. My grandfather was in a specialist dementia care home at £2000 per week. Today it's nearer 400 a day. Before 'extras'. It's v close to living in a nice room at the Ritz with dinner and drinks.

My sister who has just claimed her pension, is on pension credit, she does this, is hiding a few thousand in her sons account so she can keep claiming benefits.

They can gift the £3k .
They can also buy a funeral plan which would be a better idea .
What they can’t do is pass many larger sums of money to your family or put the house in your name .
that would definitely be deprivation of assets

And it isn’t just about the money.

If the money has gone, who is going to pay for care? What if the LA won’t? What if the money has been spent? What if LA provision is limited (home for a couple of hours or a very basic nursing home)? Are the receivers of the cash able and willing to take on a full care role?

Having just gone through this, care home fees were £5,000 a month. We couldn’t have afforded this if my MiL had given away her money.

We wanted her to have a choice, for her to live comfortably and with dignity. She worked hard for this. We wanted to honour our late FiL who worked hard too and would have wanted their savings to look after his wife, with the best that she could have.

We would only have been able to offer the level of care she needed by her living with us and by one of us giving up our jobs. We have teen children to care for too. It would not be cost effective (besides many other reasons for not giving up a career) for the sake of the money given to us.

2 different things, gifts that will be disregarded for IHT and then what they are doing which is getting rid of money so that care home fees don;t eat it up. Its a really odd thing to do though, the latter I mean - surely if you could self fund / part self fund you would as that would mean you'd have a choice of homes rather than getting stuck in one the LA chooses.

They can't make it any clearer that this is what they are doing though, gifts starting at exactly the same time as your FIL gets ill. Having said that i am not sure they have the resources to check.