Inheritance and 7 year rule

[ChocolateOrange36]

My father gave me and my husband £70k a couple of years ago as a gift. He lives in a privately rented house and has about £20k in savings.

He’s currently very unwell. If he needed to go into a care home, would we have to give the money back under the 7 year rule to pay for his care once his £20k runs out? We have used some to pay off part of our mortgage so can’t just get the money back.

Thank you.

I think the seven years applied to inheritance tax, but in this situation I think it could be viewed as ‘deprivation of assets’ and I don’t think there is a set time limit on that, it just depends on the local authority. Maybe ask on Money Saving Expert if no one else on here knows for certain, there are also very knowledgeable people on their forum

www.which.co.uk/later-life-care/financing-care/gifting-assets-and-property/gifting-assets-what-are-the-rules-alp865l0wlum

I think that the 7 years referred to applies to inheritance tax and if someone dies after giving a gift, then the amount of tax payable by the estate decreases each year.

However I think Councils can go back unlimited years if they believe there has been deliberate deprivation of assets and claim these back though I think this can be affected by his state of health when he made the gift - whether he was expecting to need care.

You may be better moving or asking the question in legal section as I am definitely not a lawyer and I could be wrong.

Thank you

Depending on his illness his care/nursing care may be covered by the nhs...broadly speaking dementia isn’t likely to be nhs funded but some other illnesses may be
www.nhs.uk/conditions/social-care-and-support-guide/care-services-equipment-and-care-homes/care-and-support-you-can-get-for-free/

Council would have to prove he deliberately it away to avoid care fees.

So if someone gave away £70k when in good health and developed care needs a few years later it's not deprivation- you can spend your money how you want at that point.

I know of a case where parent gave money away and then had a stroke a week later- not deprivation because parent couldn't know stroke was imminent.

If parent had already had the stroke and needed care, gave away the money then that would be deprivation.

The 7 year thing has no relevance here.

What 00q said-I think they can only claim deprivation of assets if needing funding for care looks imminent/known to be likely. 7yr rule is for IHT only.

We were told yes. DM gifted a house to two of my siblings four years ago (with my blessing) but she needed care. They quoted the seven years to us and said it applied to everything over a certain amount. Sadly, DM lived only a month being looked after so it never happened but they wanted a full financial assessment.

How old is your husbands Dad?

I should have explained better. DM signed over the house four years ago but only became ill and died recently.

I promise you seven years is a red herring when it comes to needing care.

I'm a social worker, I deal with this a LOT.

A friend of mine works in this sector and explained this to me. If your FIL gave away a considerable amount recently then decided eprication of assets will be considered, but not necessarily found to have taken place. some of his savings will have to be used to pay for care, as will his income. So for example if they don't find deprivation of assets has occurred, and his savings are below the threshold, all his income less approx £25 per week will be taken into account to pay for care.
My MIL is currently being assessed for care. She has no savings or property. Her income is £165 a week. She will contribute £140 of this and the Council will contribute their maximum of £455 per week meaning that she can have a care home that costs £595 per week. Where we live, that's not going to get her a nice place! So we will have to supplement the cost by about £50 a week.
If your FIL is in a similar financial position as a result of giving you his money, you can expect to pay money to get him into a better home.

Oh, and as far as I'm concerned, signing over a house to avoid having to pay care home fees is a shitty thing to let your parents do. They will likely end up in a second rate council care home for the remaining years of their lives just so their children can benefit from a house they haven't contributed towards.

No one avoided care home fees. Mum was diagnosed, spent many weeks in hospital then was sent to paliative care that she paid the money that was asked. Sadly she was only there for a month. DD died 17 years ago. The house was not DM's home when she became ill. It belonged to our grandparents originally. They willed it to DM and four years ago DM passed it onto two of my siblings. That's one fucking huge leap to make when I've just lost her. It came up during a talk about financial assessments with Macmillan.

The local authority will go with best value for the home. Therefore if their banding rate is £455 and the only home available at the time of the search was £700 then they will send him there.

They will then means test and take into any savings over £23,250 and any income. Most of the income bar the £25 will need to be contributed and the local authority pay the rest.

You could choose for your Dad to go into a £800 home but family would have to pay the top up, it can't come from the service user's money.

If Dad has a a good pension he'll have to pay most of that.

My local authority would not consider OP circumstances as deprivation as they couldn't prove intent as there were no care needs.

It's unlikely someone would go from no care straight into a home unless they'd drastically deteriorated though. Usually a package of care would be put in at home if the person was eligible. The means test for this won't take into account the any house owned and will expect a smaller contribution.

@Walnutwhipster
In that case, I'm not sure why she gave the house to your siblings. Surely she should not have had to pay for palliative care?

@Soontobe60 She wanted them to have a home that was paid for. She could have sold it and given them the money.
She paid a top up of around £150 a week for palliative care. I was in a meeting discussing the financial assessment with Macmillan shortly after her diagnosis when we didn't know how long mum would survive. She spent three months in hospital then died a month after going into the care facility. It was that quick.

As others have said, the 7 years doesn’t apply here; and honestly: for somebody who is insecurely housed in private rented accommodation and has given away just enough of his savings so as to put him just below the threshold for paying for care relatively recently before needing it - that potentially looks very much like deprivation of assets and the local authority would be looking to challenge it.

@Walnutwhipster
That's shocking that she should have had to contribute to palliative care, regardless of her income.
My MIL is currently moving between different care facilities. When she is in an NHS one, she pays nothing the same as if she were in an actual hospital. When she's in respite care she has to contribute. The difficulty is that when your in the thick of it, getting accurate info regarding finances is nigh on impossible!