Grandparent wants to give kids money

[jennakong]

My mum, who is in her eighties, has told me and my brother that she wants to give some money to each of her five grandkids. The reason for this is that she has about £20,000 in savings and is expecting a bit more money from the sale of another family member's home in the next year sometime. It's not clear how much this will be - possibly another £10-20k. She wants to give away some of her savings now as she is afraid that any care home bills in the future will swallow it very quickly - we're more or less resigned to the fact the family home will need to be sold, if that is the case. She has indicated that she'd like to give £2000 to each grandchild (two are adults and three still under 18, so it would be into their basic savings accounts - not ISAs) over the course of the next year, and maybe some of the proceeds from the relative's house sale also, in due course. Is this permissible, or could it be seen as deprivation of capital? Also are there tax implications? Any advice gratefully received...

For the under 18s a junior isas can be opened by a parent if she transfers the money to them, you can still either invest it into isa or use a cash Isa. You can’t really beat these as long term savings. Fidelity is a good investment isa allows you to choose funds etc.

Thanks Avidreader.

There is no tax on gifts, other than them being taken into account for up to 7 years for inheritance tax purposes.
This is however pretty much the definition of deprivation of assets, if she is deliberately giving away (i.e. depriving herself of) her money to avoid care home fees in future. She may or may not get away with it, but that is indeed what she would be doing.

I think you can give £3000 away each year. If the allowance was not used in the previous year you can carry it forward. This is for inheritance tax. I don't know about care home costs. I'd imagine if she isn't going imminently then she is free to do what she wants.

You might want to read the following from Age UK:

www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/deprivation-of-assets/

Look at Fundsmith. We moved there from Fidelity.

She could make reasonable birthday and Christmas gifts to her children and grandchildren without it being deprivation of assets.

If she did £200 for Christmas and birthday, £50 for Easter over a few years then she will be giving them a small amount each.

If she is perfectly healthy and she isn't anticipating being in a care home in the next few years then she should be fine. But they may investigate if she does need care.