£3000 per year

[simonwhu]

My mother who has alzeheimers is going into a care home next week.

We have tried to keep her at home but after 4 years we've had to give up the fight.

She is self funding and so her house will be sold.

My question is this, if she is still alive when her funds run out and the local authority have to start paying will they go back through her financial records, we have power of attorney, and say, what was this £20 for, or this £800 for a holiday the home is planning next year?

Also, can we still do the £3000 a year giveaway to reduce her IHT liabilty or will they come looking for it?

Is it best to keep detailed records and receipts of everything we spend. The care home is taking the cat and we are getting the cat food example.

Thanks, Simon

 

[cragmaid]

Hi...such a lot to sort out isn't there? I'm in a similar position. I keep receipts for the bigger payments...phone bill, clothing slippers etc, but just a general entry on her computer account that I run for her eg...pockect money, hairdressers, stamps... that sort of thing. If you have a scanner you could always scan receipts to a file there.
When it comes to gifts, savings etc..I try to stick to the sort of amounts that Mum used to give, for Christmas, Birthdays and so on. I gave my Nephew a sum similar to the amount she gave my Daughter for the birth of their first child.

I suspect that hedging amounts to avoid IHT might come under the same umbrella as hiding assets.......but 4 years is a long time looking ahead.....

 

[simonwhu]

Thanks for that. I suspect the £3000 is not going to work is it from what you think.

I do think that keeping tabs is a good plan and keeping receipts. With the pressure on funds I can see them being more and more tight fisted.

Cheers for your reply!

Hi...such a lot to sort out isn't there? I'm in a similar position. I keep receipts for the bigger payments...phone bill, clothing slippers etc, but just a general entry on her computer account that I run for her eg...pockect money, hairdressers, stamps... that sort of thing. If you have a scanner you could always scan receipts to a file there.
When it comes to gifts, savings etc..I try to stick to the sort of amounts that Mum used to give, for Christmas, Birthdays and so on. I gave my Nephew a sum similar to the amount she gave my Daughter for the birth of their first child.

I suspect that hedging amounts to avoid IHT might come under the same umbrella as hiding assets.......but 4 years is a long time looking ahead.....

 

[WILLIAMR]

In one case I know of the council did look back through the expenses and they wanted to know why some of the mother's money had been used towards car purchase over 4 years before.
At the time the mother was physically disabled and a bigger car was needed for her wheelchair and other items. The car was used to take the mother on holidays etc.
If the daughter was only considering herself she would have got a car for about £9,500 but the bigger car came to £14,500.
I understand the mother paid the difference.
Social services tried to say the daughter should have got a second hand car at her own expense but the daughter argued that care was not anticipated 4 years before and as she had always had new cars it was not reasonable to expect her to buy second hand car.
Another argument happened over the mother's money being used to replace her bed just under a year before she went in to care. She was showing signs of dementia then but at that point the daughter had been told the mother had water infections.
As I well know councils will try anything on as they are short of money but I have never been involved in a relative being taken to court over a parents expenditure.

William

 

[nicoise]

Dear Simonwhu,

As Cragmaid says, when acting as an attorney it is acceptable to continue to make the gifts that your mother did when she was handling her finances herself. But starting gifting new large amounts might look a bit odd if it becomes necessary for a financial assessment to be made in the future.

It may be that your mother's potential estate would exceed the IHT threshold (£325,000 for an individual, although that could rise to £650,000 if your father's estate went directly to your mother and none of his allowance was used).

Perhaps do the sums and look into the likelihood of needing to pay IHT before worrying too much about that. If your mother is in that fortunate position then at least you will have a good few years before you need to worry about applying to the LA for funding. And in the meantime the thresholds for self/LA funding may well change (along with IHT thresholds) depending on future legislation.

It is good practice to keep records of how you are spending your mother's money now that you have attorneyship - that way you can keep track and have a paper trail should there ever be a need to look at the history of her finances.

 

[Saffie]

Also, can we still do the £3000 a year giveaway to reduce her IHT liabilty or will they come looking for it?

It will be ok for IHT but not for the Local Authority should they ever be involved in contributing towards your mother's care home.
They reduced the upper threshold for my husband from the usual £23, 250 to £18,000 as I had continued to use his income to pay for the normal household utilities whilst he was in hospital and nursing home as the Direct debits came out of a joint bank account.
He was self-funding at the time.
The OPG were happy this was happening but not so the LA, hence the £5,000 extra my husband had to pay towards his care. Not that the expenditure on utilites amounted to anywhere near that amount.
However, in your mother's case,is it likely the LA would ever be involved?
That is the crunch question!

 

[win]

gifts

It will be ok for IHT but not for the Local Authority should they ever be involved in contributing towards your mother's care home.
They reduced the upper threshold for my husband from the usual £23, 250 to £18,000 as I had continued to use his income to pay for the normal household utilities whilst he was in hospital and nursing home as the Direct debits came out of a joint bank account.
He was self-funding at the time.
The OPG were happy this was happening but not so the LA, hence the £5,000 extra my husband had to pay towards his care. Not that the expenditure on utilites amounted to anywhere near that amount.
However, in your mother's case,is it likely the LA would ever be involved?
That is the crunch question!

We have had many solicitors come to our support groups in the last few years. The last one only a few weeks ago, when we were told that once a diagnoses has been given no presents are acceptable at all at this is classed as deprivation of assets. We questioned this as we had previously been told that as long it was only "customary" presents, then that would be OK. The solicitor read out a whole page on deprivation of assets from his "journal", and it certainly came across as if the receiver of any presents after diagnoses or prior knowledge that care may be required, could be asked to refund the value at any time once the LA starts contributing to care.

Annual inspections is also possible so keep receipts of EVERYTHING.

 

[Saffie]

Not sure why my response was quoted as that's virtually what I said.

I'm not sure who is going to be doing the annual inspections though, with an LPA.
Deputyship certainly, though a report rather than an inspection. I didn't think an LPA warranted an inspection unless something was reported as being amiss.

LAs won't be doing an annual inspection either, not even when they are contributing towards the fees. Just an update each year. They won't even be involved at all if someone is self-funding as Simonwhu's mother is likely to be for the foreseeable future.

Large presents of course are not acceptable of course but small ones for birthdays and Christmas surely are. Even when the LA became involved with contributing towards my husband's fees, I made these from his weekly allowance. Not his capital of course!

 

[nicoise]

Here's a link to the Law Society's guidance on Lasting Powers of Attorney:

http://www.lawsociety.org.uk/advice/practice-notes/lasting-powers-attorney/

It has a section on Gifts, in which it says:

10.2 Gifts

Section 12 of the MCA 2005 gives the attorney(s) limited authority to make gifts of the donor's money or property:

The recipient of the gift must be either an individual who is related to or connected with the donor (including the attorney(s)), or a charity to which the donor actually made gifts or might be expected to make gifts if they had capacity.

The timing of the gift must occur within the prescribed parameters. A gift to charity can be made at any time of the year, but a gift to an individual must be of a seasonal nature, or made on the occasion of a birth or marriage/civil partnership, or on the anniversary of a birth or marriage/civil partnership.

The value of the gift must not be unreasonable having regard to all the circumstances and in particular the size of the donor's estate.

This publication from the OPG is also very informative:

http://www.justice.gov.uk/downloads/protecting-the-vulnerable/mca/pg-note-02-12-gifts.pdf

Interestingly, in this it says:

The occasion of the gift

Does the gift relate to a customary occasion such as a birthday, anniversary or some
recognised family occasion?

Does the gift relate to charitable giving?

If neither of the above, it is likely that the deputy or attorney will need to apply to
Court. For example, most gifts made for tax planning purposes require a court
application.

So tread carefully!

 

[simonwhu]

So basically, limit the birthdays to around £50 and keep records of everything paid out.

 

[nicoise]

So basically, limit the birthdays to around £50 and keep records of everything paid out.

In a nutshell! Keep separate accounts, and just log it all as you go along.

Good luck