Proceeds from house sale now dad's in a home

[zizza]

FIL is selling his house and has moved into a residential care home. He's been happy for my DH and his sisters to deal with everything (they have LPAs).

We were chatting about what to do with the funds once the house is sold (he already has a fair amount of savings and a decent pension so the money can be used to earn interest).

Say for example it sells for £300k, can £100k go to each of his children to be "looked after" until he needs it? There's no intention of hiding his assets, it would all be transparent and declared if his savings drop low enough to be needed for the care fees, or if he dies within the next 7 years.

Is there anything the family need to take into consideration?

No his money can't be given to other people to be 'looked after' by the LPOAs

He can do what he likes with his money however if he has the capacity to understand the decisions he is making and they are his decisions and not decisions made for him.

there is no need for it to be ‘looked after’ by his children though.
Also, what happens if his children’s circumstances change and they find themselves desperately needing to claim benefits? They’d get nothing with 100k in the bank, no matter how they tried to convince people they were just ‘looking after it’.
7 years is for inheritance tax btw, not depravation of assets.

Transfer the money into joint accounts with DH and siblings. One account for each offspring . That way you have access to it. If the money is there when he dies it automatically goes to the surviving account holders automatically. Keep good records for any future questions that may arise

What would looking after it involve? Someone needs to invest it sensibly that’s all.

Those with POA put it into savings accounts in his name and pay the fees from there

I did this for my mum and my stepfather when they went into care homes. There was no question of deprivation of assets as they were self funding.

'The money was just resting in my account'

And did you pass on all the interest? Did you have POA? Because if you did and you moved the money into your account, that's very dodgy.

This. Putting money into your own accounts, even with the best of intentions, is a recipe for disaster. You could be accused of financial abuse / mismanagement. It remains his money, and even if he lacks capacity (which there is no evidence of) it is still incumbant on you to treat it as his money.

Just put it his bank account and leave it there.

What’s the point of this ‘looking after?’

This is what you do.

It’s a complex area and I think some people are posting without the full picture.

You say your FIL already has a a fair amount of savings. What is a fair amount? How much are his care fees? How old is he? Does he have capacity to manage his finances even if you have an LPA?

The answers to these questions will vary the situation substantially.

If he is 95 and is spending £100k per year on residential care, but has £700k in savings then the LA would have a hard time proving deprevation of assets if he CHOSE to pass on £300k

However if he doesn’t explicitly gift this then the money needs to sit with him as the LPA has a duty to act in his best interests - which will always favour him being the beneficiary of any investments.

If he is 70 with £200k in savings and paying similar care fees, the DOA will apply as its fairly obvious he’s going to need the money.

Your argument for “looking after” the money doesn’t wash. It’s either his or he gifts it.

Remember inheritance tax and DOA are different things and you need to be careful in trying to protect against one, you fall foul of the the other.

Yes I had POA and they both wanted this as they did not want the bother of it. I set up,standing orders for their fees, their hairdressing in the home and kept records of any cash I took out for their Little bit of spending. They both set up the joint accounts before they went into the home. He came to the bank with me and someone from the bank came to see my mum.

It was perfectly legal as long as you keep meticulous records.

Also it was done before they lost capacity.

I think you have misunderstood what the OP was asking, which appeared to be could they sell the house and pocket the money from the house now without getting into trouble, which they feel is unlikely because there's lots of savings to go at before anyone asks where the money from the house went.

I don't think she was talking about making the bog standard money management arrangements when someone goes into care.

OP this sounds very similar to our situation, we also have a very elderly parent in sheltered housing (not a care home though) who already has substantial savings and has repeatedly said he doesn't want to keep the proceeds from house sale. He insists he'll just write a cheque to each of us dividing it up. We're also not sure where he/we stand on this.

The fact he doesn’t want it, is irrelevant if he is likely to need it to fund his care.

As above a lot depends on how much he has already and his age/health.

Too late. It would likely be seen as deprivation of assets.
Should have done it years ago.
Start drip feeding it down the generations many years before is the key.

Thank you everyone. Lots of food for thought. I'm not sure what they think the advantage would be to sharing it out sooner rather than later, except I suppose it could save some time later with probate once he's no longer with us. He's mid 90s with enough savings to keep him going in care fees for a few years. He still has capacity although showing signs of dementia

If he is mid 90’s then gifting the money for inheritance tax reasons is statistically likely to be irrelevant.

You say he has capacity, but if he is showing signs of dementia (and this will be on care home records) then doing anything such as moving money out of his accounts/from his assets is likely to be in breach of any LPA unless you can give good reason why this is in his best interests.

There is a big difference as an LPA in managing someone’s money (in their accounts or a joint account - and you need to keep good records of any expenditure) and moving money (in this case huge amounts) to accounts not in his name.

From what you have posted this would be a breach of LPA responsibilities and has the potential to go sideways when it comes to probate if people have spent the money or interest or there are arguments about how money was invested. For example two parties “look after” £100k each but one make a loss on a risky investment and the other a gain.

Upshot is it’s far too late to start any planning to mitigate against inheritance tax at this stage and trying to do so is simply going to create a mess at probate.

You win!!!!