Been given £60K by elderly mother - inheritance tax and possible deprivation of assets issues

[mylovedoesitgood]

My mother recently sold her second home, indirectly to help me and my sibling on the property ladder. After CGT and fees, we've been given £60K each, she didn't want anything. She's of sound mind, has no diagnoses of serious illnesses or similar. She lives in a house with her second husband that's worth about £200K, has a small private pension as well as the state one, and no savings of her own. But she's alluded to joint savings with her husband.

I understand that if her estate is worth £325K (which it likely is) then no inheritance tax is due on the £100K in gifts if she dies within seven years - is that correct? If not then it's me and my sibling who will have to pay, I think?

She's early 70's and I'm worried that if I do put the £60K as a deposit I'll maybe have to sell the flat to pay for care fees. I'm well aware that if it comes down to it, the local authority will go through every aspect of her financial and medical records and can go back years and years. I'm also conscious that living in a care home typically costs a self-funder about £80K per year. She's mentioned that if her husband passes before her, she may struggle to stay in a semi-detached house if her health declines and that she may have to go into a home, but we haven't discussed the financial cost of this yet. I know only a tiny percentage of people go into homes, but I'm still worried.

Speak to AgeUK, they are actually very helpful. They have a helpline and factsheets on the website.

If she's currently fit and well and only in her early seventies then, unless there's evidence that reducing care fees was a clear part of her motivation I think you'll be OK.

I'll let others help with IHT.

Two separate issues

Inheritance Tax - this is normally paid by the estate not the recipients of gifts. The current IHT thresholds are £325k plus if you own a home and leave part of your estate to direct dependents e.g. children or grandchildren you get a further threshold of up to £175k depending on the value of the property. If I assume the house of £200k is owned 50:50 in your Mum’s case this would be £100k so her estate would need to top £425k before it became liable for inheritance tax.

Deprivation of assets - You are correct this could be viewed as deprivation of assets. However your Mum is fit and well and has other assets. Additionally most people don’t need a care home.

In the circumstances I would use the £60k as a house deposit as it’s a sensible option. If, in the unlikely event, your Mum does need care this could be 10, 20 years down the line - cross that bridge if it happens.

I might be wrong but I thought that they start looking into deprivation of assets from the point a care need is anticipated - a diagnosis, application for a carer etc. If your mum has no health issues and isn’t looking into receiving assistance, then I wouldn’t worry.

yes and no......it is true its from when a care need could reasonably be anticipated, but it might be someone just getting frailer, so no care need diagnosis as such, and receiving their support from family so no care enquiry/application as such.....eg someone whose arthritis just got worse over time.

At 70 you would not be anticipating any care needs. If you are not ill, a person has no need on the horizon at 70. We’ve given money to dcs and firmly expect to live 7 years so it’s free of IHT. That’s only due when second spouse dies anyway. Just spend the money. She’s 70 not 90.

Also I’m 70 in the summer. Elderly??! No I’m not.

Thank you for all of the replies. I’m feeling reassured.