Would this be seen as deprivation of assets?

[BloodyMiserable]

I'm going through a horrible separation. My lovely mum has offered to give me some money but I am not sure if I can accept this without putting everyone in a situation.

My Dad has mid-stage dementia & is likely to need nursing home care in the nearish future. He is 83. Mum is nearly 78 with underlying health conditions.

I think it would be viewed as deprivation of assets if he needed nursing home care. I've heard about the 7-year rule & I'm sad to say that I don't think either of them will realistically still be alive in 7 years.

So whilst the money would be a lifeline for me, I don't feel I can accept?

Is that right?

Given your circumstances surely it’s helping their child out rather than deliberate deprivation of assets?

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

Are all gifts a deliberate deprivation of assets?

“No, not all disposals of assets are necessarily deliberate deprivation. It might have nothing to do with care, especially if there was no consideration of paying for the cost of care at that time.

You might want to give tax-free sums of money to children or grandchildren, so that you can enjoy seeing them spend it and to avoid inheritance tax.
You might also want to help family members who are struggling financially or splash out on a well-deserved ‘holiday of a lifetime’.”

I don't think this would be a deprevation of assets actually. Many will disagree but I think the test is more about intention to deprive. Elderly people are not prevented from spending their money.

In practice it would depend how much of their assets they’d be giving you. If they’d be cleaning out their savings account and their only remaining asset would be their house (which couldn’t be touched while DM was living there) then it might be a problem. If they have savings of less than £23,250 then it’s definitely not an issue. If they have savings significantly more than the £23,250 cut-off and they’re giving you a relatively small portion, say 10% then it’s probably not a problem.

And if it might be deprivation of assets but you really need the money right now you could always take the money anyway and earmark it (informally and not in writing) as a loan which you’d repay if it became necessary, putting some savings in a separate account as and when you’re able. No sense in worrying about what might happen two years down the road if you can’t get the deposit together for a flat right now. I speak from experience with a grandparent who sadly died suddenly just weeks before he was due to enter a nursing home.

I’d worry about the other side of it: if your separation leads to divorce then your ex-h May be entitled to half of it! I’d get legal advice.

The 7 year rule is for inheritance tax, not care home fees. There is no limit for deprivation of assets for care home fees.

Thank you all for your posts, it really helps.

I am not married so my ex will have no right to it, thankfully.

They have significant savings (maybe 70ish K) plus a house & possibly other investments. They have been careful all their lives with money.

I don't even know what to think. On one hand, it would make a tremendous difference to me & my kids.

On the other, I am embarrassed at 48 that I am not self-sufficient enough. I went part-time after DC & have really struggled getting full-time hours.

We haven't talked of specific amounts, my mum just bought it up earlier that she would like to help out.

Amounts will make a difference to how the gift is viewed: a couple of thousand to, for example, help you with a rental deposit and pay for some new furniture for the home you move into post-separation would generally be fine. The majority of that £70k savings for a mortgage deposit, much less so.

They have significant savings (maybe 70ish K) plus a house & possibly other investments. They have been careful all their lives with money.

How much are they planning to give?

It's only deprivation of assets if it's done to avoid care home fees. So unless they give all their money, cashed in investments and their house to you then it will be ok.

We haven't talked about a specific amount; I would have to let my mum decide what she is comfortable with.

I have a colleague at work whose parents helped her buy her ex-h out of the family home so she could retain it. They have "subtracted" that amount from her share in the will for when they do eventually pass on - would something like that work?

They have "subtracted" that amount from her share in the will for when they do eventually pass on - would something like that work?

Not legally, no. That's a personal issue.

The poster who talks about the seven year rule is right. It doesn't apply to carehome fees tax. I don't think 2 or 3k would be a problem but a significant portion of the 70k could be.

If it makes any difference, the savings are held in separate names, ie they each have their own savings.

Nobody can give you an answer on this with any certainty, unfortunately. From a technical and legal perspective, deprivation of assets covers the act of knowingly giving away assets or savings with the motivation of avoiding paying your own care costs. In your case, this doesn’t appear to be the motivation.

However, local authorities are absolutely cash strapped, too cash strapped to want to give benefit of the doubt on motivation, and this has led to them pursuing (both successfully and unsuccessfully) a number of cases where significant sums of money or assets have been transferred. As a rule, the more likely it appeared at the time of the transfer of the gift that the person gifting it would need care in the near future, the more likely it is a decision will be made that the motivation was to avoid care fees.

It would be a risk you’d take and an argument you’d have to be prepared to have down the line if and when care was needed, and you need to decide how much you want to take that on.

Rather than your mum giving you money, can you ask her to pay for something directly- so for example, pays the deposit and first month’s rent on a flat? I also think they are allowed to gift something like £3k per year to children without it being seen as deprivation of assets providing it doesn’t impact on their lifestyle (sounds like it won’t). If your mum helped you on your feet to move out, can you manage ongoing rent?

@ChickenwingChickenwing

They have "subtracted" that amount from her share in the will for when they do eventually pass on - would something like that work?

Not legally, no. That's a personal issue.

Why not? You just write it in the will

Deprivation of assets - unlikely if both are alive and your mother is in good health. It isn't being done to avoid care home fees, so it isnt actually deprivation of assets anyway. There isnt a rule saying old people cant spend their money.

Why not? You just write it in the will

Because you can't give away assets as part of your will before your death. That absolutely would be seen as deprivation of assets. Your will doesn't become 'active' until you die, so planning to give your DC £50k cannot 'save' that £50k from being counted as your asset whilst alive.

There isnt a rule saying old people cant spend their money.

Actually, there is. It's the 'deprivation of assets' we are discussing.

They could presumably give you £6k with no issue at all, as £3k each under their annual exemption for tax free gifts, so if she was thinking at that value it would be no issue.

@roadsurvey

There isnt a rule saying old people cant spend their money.

Actually, there is. It's the 'deprivation of assets' we are discussing.

Exactly There is a rule that says you can't do it deliberately to run down assets so, for example, you avoid care home fees (as mentioned in the very same post of mine you quote from, one sentence away in fact)

There is not a rule that says old people can't spend their money, end of. Like old = no rights to do what you want with your money and spending it is a crime

People on here act like deprivation of assets = spending your money whilst being old. Not so.

@roadsurvey

Why not? You just write it in the will

Because you can't give away assets as part of your will before your death. That absolutely would be seen as deprivation of assets. Your will doesn't become 'active' until you die, so planning to give your DC £50k cannot 'save' that £50k from being counted as your asset whilst alive.

I think the person who was talking about the will did something different. It's very common. The asset split in the will is not equal eg 50% to each sibling. Instead, because one sibling received more in life, they are left less in the will. I don't suppose any of us know for sure, it's a 'friend of a friend said' situation, but that's how I read it. I suppose it could also have been a debt that needed repaying to the estate?

The £3000 limit is per year, true, but it can be backdated one tax year. Thus each parent can give you £3000 this year, and £3000 backdated to 2019/2020 tax year, giving a total of £12000. I have done this for adult DC when they needed deposits etc., and noted the dates and amounts on the bank transfers, and told my accountant so it is recorded. Whether in your case the council would pounce, I have no idea.

I think the person who was talking about the will did something different. It's very common. The asset split in the will is not equal eg 50% to each sibling. Instead, because one sibling received more in life, they are left less in the will.

We are not taking about the estate we are talking about assets while the person is alive and you cannot 'earmark' money that you want to leave or give it away prematurely if it leaves you without enough as that is the very definition of deprivation of assets

again the £3000 limit is to do with inheritance tax - nothing to do with care home fees

{{They have "subtracted" that amount from her share in the will for when they do eventually pass on - would something like that work?}}

The will discussion

Thanks for all the replies.

My sister is going to arrange for my mum to have some independent financial advice - she needs it irrespective of what she feels she can do to help me - as they had some financial planning advice when my dad was first diagnosed (with
dementia nearly 10 years ago).

She feels they have "too much money" and there seem to be policies, pensions etc. So it would be good to have it all looked at again.

Thanks to whoever posted the "Which" link. Mum Trusts them & I forwarded it to her. I think it's prompted her to review the finances, which I've been saying to them for a long time.

We all have POA for my dad so need to make the right decisions for them both.