Can DM save money for DS?

[RaptorWhiskers]

DM wants to set up a savings account for DS and pay into it regularly. She’s in poor health and knows she won’t see him grow up so she wants to leave him money to spend when he’s 18. Her concern is if she eventually needs care, will they take the money back from DS? If so, she’d prefer to spend it on him now instead of saving it.

She need not worry.

Grandparents gifts to their DGC are exactly that, outright gifts. But there is an annual ceiling of how much can be given tax free (£3k? - you'd better check), larger sums would be subject to survivorship taper (essentially she needs to live for 7 years after the gift for it to be completely free of tax), and of course larger gifts might be considered deprivation of assets at sort of ups was she thinking of?

She’s not concerned about inheritance tax. She doesn’t own any property and has no estate beyond her personal belongings and perhaps £5k in her savings account. So there’ll be no inheritance tax to pay.

Her concern is whether saving for DS would be seen as deliberate deprivation of assets if she needs care in the future. She’s in her 70s and able bodied but not in good health. I understand there’s no 7 year rule when it comes to deprivation of assets, the local authority can look back as far as it likes. She doesn’t want to save for DS only to have the council take it off him. If that’s going to happen she’d prefer to just spend it on him.

As above, she can give £3k pa to him.

If inheritance tax is not a consideration there is no limit to how much she can give per annum.

The LA can only consider it to be deliberate deprivation of assets if she knows she may need care and support in future. If she is fit and healthy and there is no particular reason to believe she might need care in future there is no problem.

Even if they do think she can reasonably foresee a need for care, they have to conclude that avoiding care fees is a significant reason or the only reason she is giving this money to her grandson. That is unlikely in the circumstances you describe.

And finally, even if they do think it is deprivation of assets they can't take the money back from your son. What will happen is that, when assessing your mother's eligibility for financial support, she will be assessed as if she still had this money.