MIL wants to give each grandchild a 6k gift, SIL says she cant

[Awks]

MIL has been at ours all Christmas and has been lovely. She's been in hospital recently and is ok now, 92 but still very well, independent in her own home with no intention of it being any different till she's "taken" her words.

She said last night that she'd like to give each grandaughter 6k as all 4 are getting to house buying ages and she'd like to make it a bit easier for them - that's lovely. But today, SIL says she cant as that would be seen as avoiding paying for a care home fee. MIL doesn't have any plans to go in one and has the cash plus a fair bit more if she needs care, so can anyone tell her she cant spend her money as she wants?

We don't want her to get into any trouble but she'll be gutted if she thinks she cant help her grandkids out. Does anyone have any experience of this?

Thanks

Ok thank you everyone for your help and advice it's much appreciated. Think we'll get some specialist advice to make sure all is good and above board. Interesting subject in itself.

Tell her to add them as bequests to her Will, in case she needs it in future herself.

The £3000 is per person, not between them, OP. Also, £3000 is the annual limit to be given to each grandchild without inheritance tax concerns.

This is really really easy, she can just give the money away. It isnt most of her assets, there are no limits (just ones that affect tax liability for the executor to sort out) and the gc will not be liable to pay any tax back if she dies - the tax comes out of the estate, and only if iht is due in the first place
Dont make this stressful for her by looking for complications. Sil is just confused or looking to inherit more directly?

Yes she can do it with no implications. She can give £6000 each now and use this and last year's allowance to do it. It will not count for inheritance tax if she dies. She can do anything she likes with her money.

Does she have an up to date will?

If she makes an appointment to do her will I imagine the solicitor will happily book in some extra time to talk about giving gifts etc if you warn them in advance. I think if she’s gifting now she should update her will to reduce the chance of bickering when she passes.

We had a different IHT question when doing our will, but we said to solicitor in advance we also want to talk about X which is relevant to the will. After discussing she wrote us some advice in an email, think it only cost around £200.

A decent solicitor will be able to signpost where you can get info on deprivation of assets even if it’s not technically part of their remit (I have no idea if it would be or not, but it must be such a common thing to come up)

This is nothing to do with IHT, but as a PP has said, 'deliberate deprivation of assets' which could be used to pay for care home fees instead of the council having to pay. There is no 7 year limit.

If MIL gives the money to her DGDs, fine, but if she needs care later in life it is possible the council will insist that money is taken back from the recipients and used up before they will assume responsibility for care fees.

I'd recommend a call to Citizen's Advice. They're pretty good on this sort of thing.

It is £3k per person, not to be shared. So she can gift £3k to each child or whoever now, no problem.

She can gift whatever and as much as she likes, whenever she wants

If she drew the money out of the bank and gave it away in cash, how could the local authority trace where it went? (assuming everyone denies all knowledge)

There is no gift tax in the UK, your MIL can give as much money to whoever she likes without any problems. If she is giving away money in order to 'stop the government taking it to pay for her care home' as some people seem to think, then it could be seen as deprivation of assets. However if she is not going to ask for funding for care in the future, then this is irrelevant.

Age UK has a useful helpsheet on this subject:
www.ageuk.org.uk/information-advice/care/social-care-and-support-where-to-start/paying-for-care-support/deprivation-of-assets/

Just something to bear in mind - solicitors have to ask where funds have come from for a house deposit, so a letter from Grandma saying she is giving them a gift of £6,000 on X date could be helpful for them in the future.

Ideally your MIL should keep a note of how much she gave to each person and when. If there is ever an issue in the future, this could be handy for whoever is dealing with her finances or her executor. If her estate is likely to be under the IHT limit, then this is less of an issue.

I think you are talking about care charges (home care or residential). I work in adult social services finance; our LA would not count any gifts given before the individual had specific care needs. Some people seem to think that there is 7 year rule with gifts, property transfers etc, but it is not the case. If someone gave away capital or property 10 years ago with the intention of avoiding care fees, the LA could asses them as still having it (if they could evidence it) and if someone gave a gift last month, but didn't have any care needs, our LA would disregard it.

My pils have been gifting 3k to each of their grandchildren for the last 10 years. It's common sense!

Forget about the IHT limit. She may not have an estate large enough to attract IHT in any event.

Tell her to go ahead and do it. It is highly unlikely that it will be seen as deliberate deprivation of assets for nursing home fees.

Why are people making this so difficult and complicated?

There is only a tax implication on her Estate after death if Estate is over 325k but OP has already said ;
*
I* don't think she's got 325k worth of assets, so all that's probably a moot point

Deprivation of assets for care Home purposes. This is only relevant if she has existing or immediate care needs prior to making the gift . Again - OP had already clearly said this isn't the case.

If the OPs MIL does eventually need a home - she is currently 92 and showing no signs this will be necessary... but IF It was, Again - OP has stated that she can afford to keep herself in self funded care for many years as she has savings and a property. !
Are people so lacking in basic English comprehension that they can't understand that she has got an Estate worth at LEAST 150k (care home costs 'for a few years' avg £40k x 3 yrs) but LESS than £325k. ?

Meaning that it's ALL irrelevant and she can give a way what she wants without any great concern. ! Please don't confuse her with all these ifs and buts, simply pass her the cheque book and let her do what she wants !

I have no idea either, kittens. Luckily there have been some common sense posters as well. Poor grandmother, there she is trying to do a nice thing. So many people seem to think you cant give your own money away.

You can give away what you want but if you gift your house immediately before you need a care Home and you then have less than £23,000 in assets you will have tried to avoid paying care Home fees. Not that this is the case here.

Kittens is correct. There is no reason why this lady cannot gift the money to her grandchildren.

It makes much better sense for inheritance tax purposes (if you have to pay it) to gift it much earlier and 7 years before you die, so financial planning is worthwhile for many people because you can lessen inheritance tax on your estate by gifting early.

I think there would be tax issues with that amount of money. £24k. I'm not sure what the latest caps are but it's lower than that. Local authorities can go back any amount of years to see if money has been gifted by the person wanting help towards care home fees.

What tax issues?? And as has been explained, no, it has no relevance to la care home fees in this situation. Why oh why do people think you cant spend your own money how you like? Bizarre.

Viviennemary As has been said very recently upthread - there are absolutely no tax issues. Whatsoever. Her estate is below the IHT threshold.

Op, just get your MIL to write the cheques!

In terms of tax, the issue only arises if the estate is over the IHT limit (which is going to rise if there is a property involved anyway). Also, bear in mind that if she was the sole beneficiary when her husband died, she will also have his IHT allowance.

My mum gave my DB a 40k house deposit a few years ago, kept quiet from me. When she became ill and I found out about it, she insisted on making things equal. So she had given over 80k to us in the 7yrs before she died.

BUT her estate was well within IHT levels, even including the 80k. We had to declare the gifts on the probate form, with dates, and include them in the total value of her estate, but no tax was payable.

Mum did go in a care home, but at the point of giving me the money, she had a terminal diagnosis and 'months not years' to live, so we knew that wouldn't be an issue either.

She was in the home only the last 6wks. Not knowing how long she would survive, I did some sums when she went in, and worked out that her income and savings would last her about 2yrs before we even had to consider the house!! But she did have a reasonable income and was in a home in a relatively cheap area of the country.

As for those saying its 3k a year max - thats only to avoid IHT. There is nothing to stop anyone giving a much larger chunk away, as long as all are aware that it could be considered for IHT purposes if the situation arises.

We are mid fifities with young adults, and DH and I have significant savings that I doubt we will get through, even with an active retirement, plus additional pension savings. We fully intend to pass some lump sums to our DC when they are mid twenties or so, despite them already having a decent deposit from an earlier inheritance. We would be stupid not to pass on some of our wealth to them when they will most need it.

Yes, it may come into IHT calcs, but only if both DH and I die within 7yrs, as our wills leave everything to the other, so would only be subject to IHT on second death. Even then, there would be a double allowance.