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Original poster

Deprivation of assets and care needs later in life

49 replies

TravellingWanabee · 11/05/2021 09:22

I was wondering if anyone has any experience of this situation: we have a relative who will shortly move into a retirement home after selling their property. They want to give us a lump sum after their house sells.

They can currently cover all fees in the retirement home, but I'm concerned about what happens if later down the line they have care needs that means that their current income won't cover everything (and once the remainder of their savings have gone)? I know that the council will look at deprivation of assets and if they consider that the person purposefully gave away assets to avoid care costs, that they can come after the person the money was given to. But what I'm not sure of is how they prove intent?

I mean right now, they have enough money to cover their costs, and there's no guarantee they will need more care later down the line that they wouldn't be able to pay for. And there's no intention of doing this to avoid care costs, but it's always a risk that they won't be able to afford care costs in X number of years, and I'm just concerned that in 10 years time the council could come after us!

I fully appreciate that if they were to give their money away today knowing that tomorrow they couldn't cover their care, that would be wrong, but I guess I'm wondering what happens if things change 10 years down the line? Thanks!

OP posts:
SkodaKodiaq · 11/05/2021 22:06

@Donitta

Sorry, this is definitely deprivation of assets. They’re giving the money to you when they’re fully aware that they require care and will need to pay for it.

The only way people can get away with gifting money is if you can argue that at the time the gift was made, the giver had no expectation of needing care. That obviously isn’t the case here because they already know they need care. So if their money runs out then yes, the council will quite rightly come after you to retrieve the money they gave you.

They’re giving the money to you when they’re fully aware that they require care and will need to pay for it.

This is not what OP said though? She said they don't currently have care needs and are going into a Retirement Home not a Care Home - very different. They can currently afford the fees for the retirement home.

OP asked about IF their health changes in the future

SkodaKodiaq · 11/05/2021 22:11

@Devlesko

We sold our home to the kids for £1 about 25 years ago.
Genius!
SkodaKodiaq · 11/05/2021 22:13

@TheMerryWidow1 ShockShockShockSad Is she ok now???

TheMerryWidow1 · 12/05/2021 06:39

[quote SkodaKodiaq]@TheMerryWidow1 ShockShockShockSad Is she ok now???[/quote]
@SkodaKodiaq now over 90 and lives with granddaughter who was appalled by her father’s behaviour so she is safe x thanks

OverTheRubicon · 12/05/2021 06:52

@MrsPsmalls

I find this all so vague. We are 59 still working etc and healthy. We are about to give ds money towards a house deposit. Is this deliberate deprivation? We are not stupid and can see we may well need care in the future but that's true of anyone, so are we not allowed to give any money away at all, because loads of people do.
There's a big difference between someone years under retirement age and in good health and someone who already knows that they are moving into a retirement home - it wouldn't look deliberate.
AlwaysLatte · 12/05/2021 07:10

This is such a grey area. My stepmother is in a care home with a bill of £80k waiting to be paid when hers and my Dad's joint house is sold. My Dad is now very frail and it would be so much better for him if he could sell their 3-storey house and get a small Assisted Living flat. But he has been told by the council that looks after her that he can't use any of the money. So he's staying with us, but he really wanted to be independent, as far as he could be. I wish there were clearer directives about this.

Donitta · 12/05/2021 16:55

Similar happened to my MIL. FIL went into care and she was unable to sell their house to downsize. Because if she sold the house, the council would take the proceeds to pay for FIL’s care. She had to live downstairs with a bed in the lounge until FIL died and she could sell without having to hand over the money.

AlwaysLatte be aware that if the council finds out your FIL’s house is empty they can get a court order for it to be sold immediately. My MIL regularly had snoopers checking up to see if she was still living in her house, because if she wasn’t then the council would try to take it.

AlwaysLatte · 12/05/2021 22:04

@Donitta thank you, he's not totally moved out - all their stuff is still there and he spends occasional weekends there when he's feeling well so he still uses the house. It's just that during the week it's better if he's near us as he has a lot of medical appointments that we take him to and he needs a lot of help. He's hoping to go back with carers after he leaves his current hospital stay (although we'd rather he moved in permanently but he's very stubbornl!) I'm curious to know though if he does decide to move out, whether the proceeds can be split for both of them or if it would be just used for her care. It's not clear whether he can get a smaller property or not (its 3 storeys and he's registered disabled).

ClarasZoo · 13/05/2021 22:23

@Devlesko

We sold our home to the kids for £1 about 25 years ago.
What are the tax implications of that? Massive CGT bill? They will never get first time buyer goodies.. GROB for IHT... what is the upside?
FloraPostIt · 14/05/2021 10:20

@Devlesko I hope you got legal advice. It's still in your estate for IHT (unless you are paying market rent), your children will pay CGT on any increase in value over the last 25 years if you sell it (although the £1 purchase price will be knocked off the gain...), if any of them gets divorced or goes bankrupt "your" house goes into the pot to be divided up. Just why?

Devlesko · 14/05/2021 15:08

The house can't be sold, we don't sell properties, just pass them down to the next generation, unless there comes a time when the remaining person has no descendants.
Don't know what happens then as never happened before. Grin

GettingItOutThere · 14/05/2021 22:13

[quote FloraPostIt]@Devlesko I hope you got legal advice. It's still in your estate for IHT (unless you are paying market rent), your children will pay CGT on any increase in value over the last 25 years if you sell it (although the £1 purchase price will be knocked off the gain...), if any of them gets divorced or goes bankrupt "your" house goes into the pot to be divided up. Just why?[/quote]
is there not such a thing as a lifetime interest or something in teh house?

say person a sold the house to person b, for £1 with a clause in that they can remain there throughout their life (person b to stay)?

is that a legal thing/tax dodge?

ClarasZoo · 15/05/2021 08:35

It’s not a tax dodge as such but most incentive to do that has been stripped out. If as Devlesko does, you never sell the house ever and your kids are happy to live there and never move, I actually think it would work, only being vulnerable to being claimed on divorce/bankruptcy, but there would not be much value for divorce/bankruptcy in a house that, say, your two siblings have a right to live in too...I suppose it doesn’t work for people who want to sell or move at some point... interesting though- Devlesko- you have made this an interesting debate!

GettingItOutThere · 15/05/2021 19:31

@ClarasZoo

It’s not a tax dodge as such but most incentive to do that has been stripped out. If as Devlesko does, you never sell the house ever and your kids are happy to live there and never move, I actually think it would work, only being vulnerable to being claimed on divorce/bankruptcy, but there would not be much value for divorce/bankruptcy in a house that, say, your two siblings have a right to live in too...I suppose it doesn’t work for people who want to sell or move at some point... interesting though- Devlesko- you have made this an interesting debate!
hope i didnt cause offence there with the tax dodge comment!

interesting debate though!

Supersimkin2 · 15/05/2021 19:45

What happens if two old people downsize to avoid care - and give away a bit of cash then? I know a couple who are moving into a flat that they can manage with their mobility problems, which probably won’t get worse.

ClarasZoo · 15/05/2021 21:15

@Supersimkin2

What happens if two old people downsize to avoid care - and give away a bit of cash then? I know a couple who are moving into a flat that they can manage with their mobility problems, which probably won’t get worse.
I am not an expert but I think this is fine if it’s years before they need care!
AnnaSW1 · 15/05/2021 21:21

I think it's very likely to be seen as deprivation of assets. Put simply, he can't afford to be so generous.

Devlesko · 16/05/2021 14:53

@ClarasZoo

It’s not a tax dodge as such but most incentive to do that has been stripped out. If as Devlesko does, you never sell the house ever and your kids are happy to live there and never move, I actually think it would work, only being vulnerable to being claimed on divorce/bankruptcy, but there would not be much value for divorce/bankruptcy in a house that, say, your two siblings have a right to live in too...I suppose it doesn’t work for people who want to sell or move at some point... interesting though- Devlesko- you have made this an interesting debate!
It is a minefield. In my culture we have always done this. Tbh, it's not done to dodge tax or anything illegal. It's to ensure our family members always have somewhere to live, as we never know what's going to happen in politics around where we can stay. So when we were on the road we'd quite often allow other family members to stay, an old aunt on her last legs, for some comfort and family around to care, etc. A female member close to delivery who needs somewhere warm to deliver her baby, etc. We are here atm as dh recovering from major surgery, and covid permitting we'd be on the road now.
ClarasZoo · 16/05/2021 16:38

I hope that your DH recovers quickly and you can be off again when you want to. Your house seems to be like a community asset and I see why you arrange things that way. This wouldn’t work for everyone though...interesting incite....

greyinganddecaying · 16/05/2021 17:39

If a couple own a house and are tenants in common, in the case of a sale could a care home only claim back the money from their residents half?

This would mean the remaining spouse could then afford to move into assisted living.

EdgeOfFortyNine · 16/05/2021 17:43

@greyinganddecaying

If a couple own a house and are tenants in common, in the case of a sale could a care home only claim back the money from their residents half? This would mean the remaining spouse could then afford to move into assisted living.
Yes, my parents were tenants in common so that if one of them had to go in to care then only their 50% could be taken into account.
kerosene20 · 16/05/2021 17:49

To give away 40k and leave yourself with 20k which is under the care fee payment threshold looks very suspicious. This person cannot afford to give away 2/3 of all their capital.

Devlesko · 16/05/2021 20:01

@ClarasZoo

I hope that your DH recovers quickly and you can be off again when you want to. Your house seems to be like a community asset and I see why you arrange things that way. This wouldn’t work for everyone though...interesting incite....
I can't imagine it working for others, it's part of our culture, you should hear about some of our norms. Grin Our elders don't go into homes and our children don't go to nursery, generally. From cradle to grave and beyond, each family member is cared for. Thanks
Candleabra · 16/05/2021 21:12

@greyinganddecaying

If a couple own a house and are tenants in common, in the case of a sale could a care home only claim back the money from their residents half? This would mean the remaining spouse could then afford to move into assisted living.
The family home isn't included in the asset threshold calculation for care home fees if the other partner is still living in it.
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