Why do some parents choose savings over helping adult children?

[Perthgirl]

My Mum is a 86 year old widow has just received a HMRC self-assessment to complete. My father died 3 years ago and all of their ‘joint’ money became her money. She didn't want to pay an accountant to help with her self-assessment and asked me to help.
I have mentioned previously that she would need to complete a self-assessment but this fell on deaf ears as ‘no-one has asked me for it’.
She lives in a £700k very nice house and manages well on her own. She is fit, well and active.
We get on well and I think I am a very loving and supportive daughter. I have never received any financial support from my parents since leaving home at 19.
It transpires that she has over £500,000 in ISAs, Premium Bonds, numerous building society savings accounts. All building society accounts have the £85k IFA protected amount/limit.
My husband and I are 59 and 60, both work full time and have 3 children (triplets) in final year of university. When I did a rough calculation on what £££ she might owe, her comment was oh ‘I might not be able to afford to give the children their £50 Christmas money this year, as I will have a large tax bill’.
It is her money and she is entitled to do what she pleases, etc. She enjoys a very comfortable life, with 3 overseas holiday each year and a busy social life.
She has previously said that she has so much money coming in that she does not know what to do with it. My Dad had a very good state funded pension which she still receives. When I suggested that she might like to help the grandchildren through Uni, she said, well no, as I do not know when I might need the money for myself!
Why would some parents/grandparents choose to pay £1000s to the tax man rather than possibly help the family?
I realise that she may need to fund a care home at some later stage, but £700k + £500k = £1.2M.
Can anyone help me understand?

The entitlement of the younger generations to their parents’ money is astounding. As is the expectation that parents should be supporting their adult children.

Just why exactly?

You raise your children to presumably be responsible adults, independent, capable of taking care of themselves.

Amazing the amount of adults on here who complain that their parents want to be too involved in their lives, that they visit too much, take too much of an interest in them and their children and have opinions, and who are then told that the parents need to let go of their adult children. But in the same breath feel that letting go doesn’t mean they shouldn’t still be dishing out their cash to said adult children.

And while yes, the cost of living absolutely has increased, so has people’s expectation of what they should be entitled to have.

Two cars/the best food/nights out/foreign holidays/mobile phones and tablets for their primary aged children and the list goes on.

Some people do struggle.

But many more absolutely do spend money they could afford not to.

The average wedding now cost £30000, and people feel they’re entitled to it. That’s a good deposit for a first time home. The hell would I as a parent be funding that.

And meanwhile a care home will cost about £2k a week, so that’s over £100000 a year before any other expenses, so that £500k isn’t going to go far now is it?

That just the amount in her current account, never mind the rest!

No I don’t think it’s savings drawdown. Why would she draw money she doesn’t need?

When the OP's mother left school 3.4% of the population went to university.
Now it's just short of 40%

The OP's mother must think the system is much more favourable for the people who came after her.

Not with good planning. She can gift out of income IHT free. She has annual allowances covering an amount of gifts to other people. IHT free gifts on marriage of the recipient. If she gifts early enough and lives long enough, the amounts are IHT (and tapered down even if she doesn't live long enough).

Funny you don't mention how wages aren't keeping up with inflation. Or that you don't mention the ridiculous increase in housing costs that people face these days. Nor all the increases in indirect taxation, i.e. VAT, insurance premium tax, fuel duties, landfill taxes, etc.

Unnecessarily frugal re Christmas and not paying an accountant perhaps, but Christmas hasn't happened yet and OP could refuse to do her taxes. However op also wants and suggested her mum help her 3 grandchildren through uni. That's not moaning about someone being frugal it's entitled.

What does that have to do with anything?

At 86, it’s too late to start gifting from regular income without triggering a HMRC compliance check. The time for planning tax avoidance is long gone.

Because benefits were miserly, I really don't think you get how little people got in unemployment benefit, it wasn't intended to be a living wage, it was a stop gap. Family allowance wasn't paid for the 1st child, child benefit replaced that in 1977 and paid for all children , there was no such thing as rent allowance,/housing benefit until 1972, There are plenty of people older than me who never earned huge salaries, they just about managed. Today we have food banks. Why is that?

No problem with gifts as long as, like you say, they can afford it and it's freely given through goodwill etc.

The allowance is 3k in total, which can be split among several people.
The only tax your mother would save would be tax on the interest of the 3k.

If your father got a pension from a government job them you mother probably only gets half of this. She would probably get an income of around 22k a year from all her investments. She may need this. If she cashed in her investments to give you money then she wouldn’t get the income from them.

We have paid for our children to go through uni, we paid for their driving lessons, first cars, weddings and house deposits but I do accept that what money we have now we may need for our old age.

While you are comparing what your mother has now with what you and your children have, your mother will be comparing what you have now and what she had at your age. She comes from an age when everybody saved what they could and didn’t spend it on half the things that people do today.

Your mother has to plan for all eventualities and she could need expensive care at home. In old age she may want to stay in her own home and have live in carers come in. Bearing in mind people don’t work 24/7, 365 days a year, she may have to employ 2/3 carers.

If an accountant has told you that I'd sue them! It's not too late. There's a history of income and a history of spending. If income > spending over a period of years, there's plenty of scope for making gifts out of income, however old they are. The "test" is all about typical levels of income and typical levels of spending. Age doesn't come into it.

Perhaps she feels she doesn’t need to help the with uni costs because of this?

Why don’t you think she sounds very nice? There’s nothing in the post for you from which you could make that assumption. You don’t sound very nice either. HTH.

It is absolutely criminal that care home costs are so high - what do most people do who want have accrued that type of money?

Secondly, people saying her house value is irrelevant. Can't you draw down money on an asset? Seems unfair if you can't, especially when elderly. Obviously OP mum doesn't need to do this but in general.

I love next to a lovely gentleman aged 93. He lives in a beautiful home, with a site that is about 1 acre or maybe more. He hasn't maintained the house and still has single glazed windows. He inherited the house and was very successful in his career. He has no children so who knows what will happen to all he has amassed but he clearly has no interest at all in spending jt, including on himself!

Well you know what they say…. The only people who pay inheritance tax are those who do not trust their heirs.

@Yetone

The allowance is 3k in total, which can be split among several people.

PLUS gifts out of surplus income, PLUS gifts on marriage, PLUS small gifts allowance of £250 per person, PLUS birthday and Christmas gifts out of income, PLUS up to £5k on marriage of a child PLUS| £2,500 on marriage of a grandchild, PLUS gifts given over 7 years prior to death OR tapered relief for gifts given over 3 years before death if they die before the 7 years.

They're just the simple/basic exemptions.

For the more adventurous there are other exemptions, such as business assets such as unquoted company shares, AIM shares, unincorporated businesses.

If all else fails, you can buy a life insurance policy solely intended to cover the IHT upon your death.

IHT is probably the most easily avoided tax because of all the exemptions/options. Yes, best to plan many years before you expect to die, but still plenty of options for the elderly.

Yes, a lot of truth in that.

He might have left it to charity. Are you single? Only joking!

Ha ha 😆

I think he will likely leave it all to his church..

Well, if he needs a carer…

And this is why anyone with a decent amount of money, needs the advice of a financial advisor.

@Badbadbunny Yes you can gift out of surplus income (we have looked into this in detail), but maybe the OPS mother doesn’t have surplus income. She may only be getting half hers husband’s pension plus about 22K income from her investments.

@mikado1

I love next to a lovely gentleman aged 93. He lives in a beautiful home, with a site that is about 1 acre or maybe more. He hasn't maintained the house and still has single glazed windows. He inherited the house and was very successful in his career. He has no children so who knows what will happen to all he has amassed but he clearly has no interest at all in spending jt, including on himself!

We had a guy in our village just like that. Lived in his parent's family home, never married, just continued to "exist" once his mother passed a few decades ago. His house was a complete wreck of a shambles. He was an author (self publishing) and photographer and parts of his house were full of stocks of his books and boxes upon boxes upon drawers upon cupboards full of photographs and negatives. He obviously got great pleasure out of taking photos and writing local history books. But he wasn't a "business man" and clearly lived on inheritance/savings/benefits rather than deriving a worthwhile income from selling his books/photos. Spent no time nor money at all on his house and garden, the garden being an overgrown forest that is basically impossible to go into.

He died several years ago and his house is still a wreck. Apparently no living relatives. Full estate, after costs/taxes, to various small local charities. The executor of his will is a solicitor (who himself is aged/retired) and seems to be struggling to deal with the estate. I saw that a house clearance firm went in, full hazmat overalls and masks, and seemed to fill several skips, a couple of years after he died. His will/probate was published and he'd left his books and photos (and royalties etc) to the Parish Council, but there was then a PC meeting confirming they declined the bequest as they didn't have the manpower to organise it and administer it (income derived inadequate to cover the costs of staff and storage). It was all offered to the village library who likewise declined as they had no storage space nor manpower to look after it all. Main library and museum in the nearby city also rejected it. So his lifetime's work is still boxed up in a run down, leaky, infested house because the executor simply doesn't know what to do with it and doesn't have the heart to throw it in the skips! The local charities are just sitting back and waiting for their share of the house sale proceeds, not remotely interested in his chattels, books nor photos.