Deprivation of assets

[kingmidas1962]

I know this has been covered many times - and this is theoretical, and involves a lot of 'if's' but I'd like to ask peoples opinions. I'll try to keep it simple!

MIL (80) is selling her house and moving to rented sheltered accommodation. She has a healthy pension income from my late FIL. She currently self funds her carers and will continue to do so when she has moved.

Lets say the house sale generates £150,000.

She wants to give some money to each of her 4 children from the proceeds, rather than (in her words) 'everyone having to wait until I'm dead' so we'll say shes going to give them £20000 each - that leaves her £70000.

If she becomes incapable of looking after herself within a couple of years and has to go into full time residential care, she will still be self funding until her assets drop below the threshold (whatever that might be at the time)

IF she lives long enough for her assets to drop below the level at which point she becomes eligible for LA support, (this is the crux of the matter) how long will the LA look back at her accounts to see how much money she USED to have, and whether the assets have been intentionally reduced to avoid paying for her care?

 

[lin1]

Hello.
Others who are more experienced than I will be along soon.
I believe their is no time limit as to how far the LA can go back .

my own personal opinion though, is that they may well only do such an in depth check if they think their is a possibility of dep of assets.

 

[Saffie]

The LA can look back as far as they want to. The 7 year rule only applies to Inheritance tax. They will certainly ask where the proceeds of the house sale have gone I would imagine no matter how many years pass, especially as your MIL is already needing care in the home and could consider it a deliberate deprivation of assets
£70,000 doesn't last long where nursing home fees are concerned either.
It's a risk but whether one worth taking is another matter.

 

[Pickles53]

I know this has been covered many times - and this is theoretical, and involves a lot of 'if's' but I'd like to ask peoples opinions. I'll try to keep it simple!

MIL (80) is selling her house and moving to rented sheltered accommodation. She has a healthy pension income from my late FIL. She currently self funds her carers and will continue to do so when she has moved.

Lets say the house sale generates £150,000.

She wants to give some money to each of her 4 children from the proceeds, rather than (in her words) 'everyone having to wait until I'm dead' so we'll say shes going to give them £20000 each - that leaves her £70000.

If she becomes incapable of looking after herself within a couple of years and has to go into full time residential care, she will still be self funding until her assets drop below the threshold (whatever that might be at the time)

IF she lives long enough for her assets to drop below the level at which point she becomes eligible for LA support, (this is the crux of the matter) how long will the LA look back at her accounts to see how much money she USED to have, and whether the assets have been intentionally reduced to avoid paying for her care?

There are lots of folk on here far more expert than me, but I think there is no time limit on the number of years the LA can look back. I would be particularly concerned if her health now indicates in any way that she would be likely to need residential care in the next few years.

 

[Katrine]

MIL's reasoning that there will be money available from her estate when she dies is flawed. She could well need it all for her own care. If she doesn't, then her beneficiaries will have the money later. I would advise her that she is the no.1 priority with regard to her funds. Since she is moving into sheltered accommodation it is reasonable to assume that she may need residential care in the future. It is sad, but nowadays elderly people are not free to make large cash gifts, or to give away property, without this issue of deprivation of assets looming over them.

IMO she should invest the profit from her house sale to increase her income. By giving money away now she is not only potentially at risk from 'deprivation of assets' with regard to LA funding, but is depriving herself of additional income.

Perhaps you could sweeten the message by saying that investing the money could be of greater benefit to her family in the long run and will give them peace of mind that she will always have the best of care. The longer she is self-funding the more choice she has about her care because she won't be at the mercy of a cash strapped LA.

 

[nitram]

"...She has a healthy pension income from my late FIL..."

Just what 'healthy' means and whether it is index linked in some way has to be considered.

 

[WILLIAMR]

As far as I am aware a council can go back any length of time if it is suspected assets are given away or trusts are set up to avoid care home fees.
That said I did hear of a case where a daughter never left home and the parents managed to split the ownership of their house in to tenants in common ownership about a year before the father had to go in to care and the daughter was the beneficiary of both wills.
Sadly the mother pre deceased the father which was unexpected.
I did hear that the council tried to argue deprivation of assets had happened but the mother was within her rights to will her half of the house to the daughter.
As the daughter had the right to stay in the house it could not be sold as there is no market for half a house with somebody in it.
Sadly the father passed away a few weeks later and the daughter inherited the house 100%.

William

 

[Raggedrobin]

You need to bear in mind that a 'healthy pension' may not cover the best choice of care home completely. My mother's home costs over £50,000 a year and while it is using up her money, I would rather she was in a care home that she likes. If your mother doesn't have sufficient funds to cover say that amount, because she has given it away, her choice of home will eventually be limited by what she, or the LA, can afford. That is the disadvantage of giving her money away.

Having said that, I always wished my mum had given us some of her savings in an unofficial trusting capacity, to keeo if she didn't need them but to use for her benefit if she did. Then some of her capital might have been safe, if she had done it a long time ago.

 

[kkerr]

Has your mother received a diagnosis of dementia (Alzheimers/vascular, etc) yet. There is NO law against her giving her money away IF she has no diagnosis and therefore cannot forsee that she will need long term care in the future. IF she has already been diagnosed /is being treated for dementia, than the LA can go back as far as they like. My recommendation, is she puts that money aside - that she would like to give away, into some sort of interest bearing account - then if in the end it isn't needed, it will be there for her to gift to her family, unfortunately, if she does need it, the LA will expect her to use that money to fund her care.

 

[Pickles53]

You need to bear in mind that a 'healthy pension' may not cover the best choice of care home completely. My mother's home costs over £50,000 a year and while it is using up her money, I would rather she was in a care home that she likes. If your mother doesn't have sufficient funds to cover say that amount, because she has given it away, her choice of home will eventually be limited by what she, or the LA, can afford. That is the disadvantage of giving her money away.

Having said that, I always wished my mum had given us some of her savings in an unofficial trusting capacity, to keeo if she didn't need them but to use for her benefit if she did. Then some of her capital might have been safe, if she had done it a long time ago.

I agree RR and might even have suggested it if I had known how much her savings were. We're a very ordinary family, mum and dad earned an an ordinary living. I had always thought that their house was the main asset as they were always very careful with money. I don't think that mum realised how much her savings had built up even when she was well.

 

[Raggedrobin]

I think one older generation did very well with their savings; remember when they got 10 per cent interest! My parents were getting 10 per cent on their very modest savings, when they retired. They never touched the savings or the interest, which as they lived into their 90s meant the money and the interest was being invested over a 30 year period. They were lucky to be able to really save in a way we can't now due to the low interest rates.

 

[kingmidas1962]

Has your mother received a diagnosis of dementia (Alzheimers/vascular, etc) yet. There is NO law against her giving her money away IF she has no diagnosis and therefore cannot forsee that she will need long term care in the future. IF she has already been diagnosed /is being treated for dementia, than the LA can go back as far as they like. My recommendation, is she puts that money aside - that she would like to give away, into some sort of interest bearing account - then if in the end it isn't needed, it will be there for her to gift to her family, unfortunately, if she does need it, the LA will expect her to use that money to fund her care.

No, there is no official diagnosis of vas dem or any kind of dementia ... more of a suggestion by her GP (to the best of my knowledge as I'm not privy to all the details) BUT she has significant physical problems and it might be those problems that see her needing care, rather than dementia - either way the principle of deprivation would be the same, I guess, if she needed care but had given away some of her assets.

Thanks everyone - I get the feeling that it's not just her idea but that it has been 'suggested' by one of the siblings who seems to see mils house as somethung that is partly 'hers' when mil is gone, so thinks she could have 'her bit' now!

Sent from my SM-T210 using Talking Point mobile app

 

[Chemmy]

By investing the proceeds from the sale of the house, she will be in a better position to top up any shortfall in her income from her pensions to meet the fees. As soon as you start raiding the assets, then her potential income reduces too. My mum had a pot of just over £200k with savings and the proceeds from the sale of the house. Judicious investment in fixed rate bonds gave her enough to add to her pension/allowances each month and even after eight years self-funding, I still had a sizeable inheritance when she passed away. It's not true that it will all necessarily be swallowed up in fees.

This is what we're doing with MIL's assets now - there will be no early 'inheritance' for any of us...it's still her money. Perhaps your inlaw needs to be reminded that an inheritance only kicks in once someone's actually died. We're clearing MILs house now and one SIL is proving to be a bit of a magpie when it comes to wanting stuff. We had to spell it out that if any of us takes an item to display/use then that's fine, but if it's been taken to sell on the quiet, then that's not acceptable and the proceeds should go back into MILs pot. I was shocked that this even had to be discussed, tbh, but there you go. These circumstances don't always bring out the best in people.

If your MIL had hundreds of thousands tied up in savings, then it'd be unlikely to be a problem but £150k+ isn't a fortune these days and if there's any chance that she will need a CH because of her physical needs (which is why my MIL has just gone into care) in the not so distant future, I think you're in danger of it being viewed as deprivation. You're right in that the same DOA criteria will apply to care needs for conditions other than dementia. I agree that if she's already having carers in, you're on dodgy ground.

 

[Chris-G]

Has your mother received a diagnosis of dementia (Alzheimers/vascular, etc) yet. There is NO law against her giving her money away IF she has no diagnosis and therefore cannot forsee that she will need long term care in the future. IF she has already been diagnosed /is being treated for dementia, than the LA can go back as far as they like. My recommendation, is she puts that money aside - that she would like to give away, into some sort of interest bearing account - then if in the end it isn't needed, it will be there for her to gift to her family, unfortunately, if she does need it, the LA will expect her to use that money to fund her care.

Hi KKer,

I am of the same opinion.

I posted elsewhere on the site in a similar vein. It cannot be correct for the council to decide that the car you brought in 1984, some 30 years before a diagnosis, and establishment of the need for LA assisted care amounts to deprivation of assets.

The same would be true of expenditure that mirrors previous behaviour even after a diagnosis. For example.... if someone regularly took the entire family away on paid holidays, then why should they not do that now even if they have a poor prognosis?

It would be ludicrous to make a person stop living their life at the precise moment that they get any diagnosis that might signal a need for assisted LA care: Simply so that the capital assets of that person are increased for their future use.

It would also mean that other family members or a spouse immediately subsidize such a diagnosed person in the fear that any expenditure say for their gas, electric, mortgage, phone, food, travel payments later become subjected to tests to establish what they did with their cash.

For example.... if (as I have seen), a person has a totally incapacitating accident that requires lifelong LA assisted care..... how the hell could they go back 30 years and complain that the person had spent their money?

Much of what I write is only theoretical.... but I have experienced many insane and incorrect actions during this process.

In the light of the potential asset and income values involved, I would advise anyone to seek a paid financial adviser's assistance. It might cost you a few quid now but might save a lot of cash and angry heartache later. Tell the advisor what outcome you would wish.... I am sure they could ensure that outcome is legal and un-challengeable.

Also, perhaps someone can give me a definitive answer.

If you are in receipt of NHS CHC funding, then as you might expect to retain it: Is it permitted to spend income ( not to dispose of assets), during that period when your cash is not able to be inspected or threatened by the council?

I ask because there is a paranoia in my family about spending mum's income during CHC funding periods.

If that money is not spent, (due to fears of breaching CRAG rules), then when the Alzheimer's sufferer gets better; from the application of that wonder drug...... black biro ink..... and CHC is withdrawn, the patient of course can have amassed a considerable sum. Then the council gets to spend it for them. That does not seem fair either.

All the best CG.

 

[Saffie]

You have some mistaken views about expenditure I think.

Then the council gets to spend it for them

The council will never spend the money. The person will use the money to pay for their care which is only right and proper - surely.

If your mother is receiving CHC funding, there is no reason for not spending some of her money - as long as it is for her welfare only or for things she would normally pay for, such as birthday presents for the family etc. The LPA or Deputyship would prevent you doing more than this, not the council!

I posted elsewhere on the site in a similar vein. It cannot be correct for the council to decide that the car you brought in 1984, some 30 years before a diagnosis, and establishment of the need for LA assisted care amounts to deprivation of assets.

You are right - it is not correct. No LA would do this as it would have no relevance to current needs.

It would be ludicrous to make a person stop living their life at the precise moment that they get any diagnosis that might signal a need for assisted LA care: Simply so that the capital assets of that person are increased for their future use.

It would also mean that other family members or a spouse immediately subsidize such a diagnosed person in the fear that any expenditure say for their gas, electric, mortgage, phone, food, travel payments later become subjected to tests to establish what they did with their cash.

It would indeed be ludicrous and no-on would be expected to stop living their life nor paying for their normal bills.

However, neither would they be expected to start giving away large chunks of their capital.

 

[Pickles53]

Well said Saffie! I want to make the best use of mum's money to give her the best available care, the only issue for me is how to manage that money to make sure it lasts.

I don't think I am entitled to one penny of inheritance and I don't see why the cost should fall on other taxpayers who may be much worse off than her.

 

[WILLIAMR]

Well said Saffie! I want to make the best use of mum's money to give her the best available care, the only issue for me is how to manage that money to make sure it lasts.

I don't think I am entitled to one penny of inheritance and I don't see why the cost should fall on other taxpayers who may be much worse off than her.

Hi Pickles

I think you may be correct in most situations but at present a parent is under no legal obligation for one parent to leave their estate to the other parent and things can get complex if say the offspring owns half the house and it is their home.
My mother left her half of my parental bungalow to me because she did not want her half of the bungalow to go to a possible future wife of my father.

If my father had needed care I think most of the bill would have fallen on the taxpayers as I would have not agreed to the bungalow being sold.

William

 

[Chemmy]

Well said Saffie! I want to make the best use of mum's money to give her the best available care, the only issue for me is how to manage that money to make sure it lasts.

I don't think I am entitled to one penny of inheritance and I don't see why the cost should fall on other taxpayers who may be much worse off than her.

Hear, hear, Pickles. There's legally right and morally (imo) right and the two are not always the same.

 

[garnuft]

Well said Saffie! I want to make the best use of mum's money to give her the best available care, the only issue for me is how to manage that money to make sure it lasts.

I don't think I am entitled to one penny of inheritance and I don't see why the cost should fall on other taxpayers who may be much worse off than her.

Yes, hear, hear from me too.
I saw my cousin the other day (he didn't bother to come to my Mam's funeral) his father died last year( Mam and I attended his funeral, even though she was lost with all the people around her) so cousin was obviously quoting his own experience...

His first words...not 'how are you since your Mam died?'
no...he said, with a big grin
'Are you enjoying spending the spoils?'.

Sometimes there just isn't words.

 

[Onlyme]

It makes you want to answer yes, I bought a lovely coffin, paid for a beautiful funeral and headstone for Mum with HER money.