Selling father's house before death and distributing proceeds

[madamy]

My elderly father is in a care home, he has an excellent pension and good savings both of which will easily cover his care home fees for the rest of his life.
He has a house which needs selling, and have been advised that selling before he dies is recommended to avoid capital gains tax. There are 6 children, all of whom will inherit an equal part of his estate.
My sibling (who has POA) is wondering whether to split the proceeds of the sale equally amongst us all (as the cash will help some of us considerably) rather than keeping it in his account and it being part of his estate when he dies. Am I right in thinking that this lump sum would be subject to inheritance tax of up to 40% when he dies?
Hope this doesn't sound callous, we love him very much but are trying to be practical.

OP, your sibling may have POA, but has this been activated at the Court of Protection yet?
When a POA is activated, the person who is named will get a full list of instructions of what they can and cannot do.

If he has dementia he could live for many years. The house should probably be sold withing the 3 year period and the money invested. Presumably this will be a significant amount of money and so you may want to consult a financial advisor. This is a useful protection for the person holding POA.

If FIL has been in the habit of making gifts to his children and grandchildren this can continue while his income exceeds his care costs. Up to £500 to each child would be exempt from inheritance tax. A financial advisor may be able to say larger regular amounts are possible.

Managing anyone’s money with a POA forbids gifts.

No, you are allowed to keep making what would have been normal gifts eg presents to grandchildren at Christmas if they had habitually done that before.

https://podcasts.apple.com/gb/podcast/the-retirement-caf%C3%A9-podcast/id1441976448?i=1000538299828 You might find this helpful, op. Your sibling would need the court’s permission to do this and in the circumstances it sounds quite unlikely it would be given. Having poa doesn’t mean you can just help yourself.

Small Christmas and birthday presents are completely different.

@tesseractor yes I am wrong. Small gifts given previously can be given:

https://www.gov.uk/government/publications/giving-gifts/giving-gifts-web-version

This.

Gift giving depends on what FIL has done previously, the size of his estate and what is in his best interests. Maintaining contact with his family will still be important even if he sometimes or always forget who they/he is. It seems his estate is fairly generous so while the person with POA cant give away the proceeds of a house sale he can justify smaller gifts.

When a relative of mine went into a care home they were distressed by not being able to continue gift giving. They didnt have spare money after care home fees, if they had gift giving would have meant less distress.

If a relative of mine had dementia I'd be looking at the evidence for lithium deficiency. I'm going to ask my husband to talk to one of his friends we are very concerned about. I'll buy the supplement for him if he is able and willing to take it.

Think of it this way OP. You are currently confident that his pension and savings can cover his care. But what if something happened to the financial institution? Unlikely scenario indeed but if it happened then it would be in his best interests to have the equity in the house to fall back on. Therefore it can’t be in his best interests to give that away.

Check out the downsizing rules re: inheritance tax.