Hi all.
Just to introduce myself. I'm an Accountant, but before you get too excited I am very rusty on lots of areas, having been out of practice for a long time, and definitely do not hold myself out to be an expert. [Some words deleted by Bruce]
I imagine there will be others on this site with more knowledge than me, so please add to this thread and feel free to correct me.
My mum has just been diagnosed with AD, I am now realising the financial implications, so here is what I understand so far. I am new to this, just trying to do my best for all.
1. In my local authority a diagnosis of Alzheimers means that council tax is cancelled. Also qualifying for Attendance Allowance does the same. So find out if your council has that criteria and apply for it. In my area it is called "Council Tax Disregard".
2. Apply for Attendance Allowance pronto if your relative has dementia, Alzheimers or related illness. No guarantees, but I applied online on Friday and got a phone call today to say mum was more than likely eligible for it. She won't get it while she is in hospital (apart from 4 weeks, so not to be ignored at £64.50 a week), but once she is "eligible" it might open the doors for other support.
3. Paying for care in a hospital/care home/nursing home. If your loved one has little savings (below about £21,500 but it varies) and doesn't own their own home, they will probably get care fees paid for them. Care in an NHS hospital is free. Care in a nursing home could possibly be free if the patient is there because they primarily need nursing care. I am not experienced enough to say what that is. Care in a Care home is a bit of a problem, some could be classed as nursing care, but probably most is not or is a mixture of nursing and general care, so if your loved one is classed as having to pay, they will probably not get financial support.
STOP PRESS. THIS WEEK'S EDITION ON RADIO 4 OF MONEY BOX LIVE WAS ALL ABOUT FINANCING IN CARE HOMES ETC. LISTEN TO IT AGAIN ON SATURDAY 12 NOON, OR VIEW THE TRANSCRIPT ON THE INTERNET IN A COUPLE OF DAYS.
4. If your loved one owns their own home and another family relative (often a spouse) still lives there, it would not normally be counted as part of their assets, so you might get full financial support for the ill person. If there is no other family relative (dependent) living in the home, its value is likely to count a part of their capital, and they will have to pay towards their care. HOWEVER, that doesn't mean you have to sell the house. New regulations come in in October but I haven't yet sussed them out. Will post again when I have had time. But one possibility is that you keep the house and the Care Home builds up a debt, and when the house is eventually sold, the proceeds are used to pay off the debt. You might ask what use is that, but if the value of houses continues to rise, a house that you currently have valued at £150,000 might fund 4 years care at todays prices plus inflation, a house still owned in 4 years might give an extra 1 or 2 years care due to it having increased in price.
But you could consider renting out the house rather than selling, and using the income to partially fund the relative's care. You would pay tax on the rental profits (but you'd probably pay tax on the interest in the bank on the sale of the house), and remember that an elderley person gets a higher tax-free allowance than most of us working-age people. But if you rented it out, you'd also benefit from any increase in the price of houses by the time you come to sell it.
I'm no expert, these are just things to think about.
Renting out property incurs either cost or hassle, or both. Tenants can be good or bad. They can default (i.e. not pay), they can cause damage. If you manage the rental yourself you need to collect rents, perhaps sort out repairs, but if you use an agent they will do this for you, but charge a fee. Renting a house out usually means you have to provide a good standard of decor and furniture (if provided), which might cost you money. Nobody in their right mind would want to rent my mother's house in its present state. The rooms are all 1950s style, the central heating is 40 years old (bloody good system, I would say, installed by my dad and his mate Walt), but not efficient any more.
Think carefully about renting out a property, it can be fraught with worry.
There is a lot of stuff on the media at the moment about switching a jointly-owned property from being "Joint Tenants" which most married couples are to being "Tenants in Common". Apparently the latter is better when it comes to talking about Care Homes, but I haven't had time to scrutinise the difference and I am currently not convinced that the difference is relevant for most people. But please do satisfy yourselves of this, and don't rely on me, cos I am not yet sure.
5. Wills. No expert. People tell me to write wills "in trust" for other family members. It seems to me to be a thing to seriously consider, but I do not understand the ins and outs of it.
Basic principles. When a person leaves their estate to their spouse, there is no Inheritance Tax to pay at all. The problem may come when one spouse has died and the living spouse owns the house and all the bank accounts and investments. If these total less than £300,000, or even a bit over, don't worry. But if they total considerably more than that, then when the second spouse dies (and typically leaves the estate to their children or anyone else), there will be inheritance tax to pay, at 40% on the excess over £300,000. So if the estate is, say, £500,000, the Inheritance Tax would be 40% of £200,000, i.e. £80,000.
Some people might say, fair enough. The beneficiaries are getting all that money for no effort on their part, so why shouldn't they pay £80,000 in tax? Some might say it is disgraceful that you can't leave your assets to your children without paying tax. I am not getting into that argument. There are all sorts of things you can do to avoid paying this tax, all legal. Some involve putting the assets into a trust, and if you thing this is for you, please do consult a solicitor who is experienced in trusts. An ordinary local solititor will not do. You need a specialist. Yes, it will cost more, but might be worth it. [words deleted by Bruce]
Another possibility is that when the first spouse dies, having left everying to the second spouse, you can execute a "Deed of Variation", which means the second spouse agrees not to take all the assets themselves, but some of them go to the children instead. This means that when the second spouse dies they don't own so much in their own right, so less tax is payable.
But all of the above needs advice from a solicitor who is experienced in Inheritance Tax. I am not. I can only tell you what the possibilities are and how to seek further help.
Hope the above is helpful. [words deleted by Bruce]Love to you all
Margaret
[Margaret's post has been edited by Bruce - simply to change some of the wording.
While members such as Margaret have some knowledge of specific areas, there are no experts in anything [other than their own situation] on TP, and we always recommend that members take independent advice on all matters, as well as taking on board information presented by other members.
We furthermore suggest that any advice sought here is done in public, as far as that may be possible, in order that other members may provide alternative views. The power of TP is to provide a variety of views, such that members are aware of many things that are hopefully relevant.]
Just to introduce myself. I'm an Accountant, but before you get too excited I am very rusty on lots of areas, having been out of practice for a long time, and definitely do not hold myself out to be an expert. [Some words deleted by Bruce]
I imagine there will be others on this site with more knowledge than me, so please add to this thread and feel free to correct me.
My mum has just been diagnosed with AD, I am now realising the financial implications, so here is what I understand so far. I am new to this, just trying to do my best for all.
1. In my local authority a diagnosis of Alzheimers means that council tax is cancelled. Also qualifying for Attendance Allowance does the same. So find out if your council has that criteria and apply for it. In my area it is called "Council Tax Disregard".
2. Apply for Attendance Allowance pronto if your relative has dementia, Alzheimers or related illness. No guarantees, but I applied online on Friday and got a phone call today to say mum was more than likely eligible for it. She won't get it while she is in hospital (apart from 4 weeks, so not to be ignored at £64.50 a week), but once she is "eligible" it might open the doors for other support.
3. Paying for care in a hospital/care home/nursing home. If your loved one has little savings (below about £21,500 but it varies) and doesn't own their own home, they will probably get care fees paid for them. Care in an NHS hospital is free. Care in a nursing home could possibly be free if the patient is there because they primarily need nursing care. I am not experienced enough to say what that is. Care in a Care home is a bit of a problem, some could be classed as nursing care, but probably most is not or is a mixture of nursing and general care, so if your loved one is classed as having to pay, they will probably not get financial support.
STOP PRESS. THIS WEEK'S EDITION ON RADIO 4 OF MONEY BOX LIVE WAS ALL ABOUT FINANCING IN CARE HOMES ETC. LISTEN TO IT AGAIN ON SATURDAY 12 NOON, OR VIEW THE TRANSCRIPT ON THE INTERNET IN A COUPLE OF DAYS.
4. If your loved one owns their own home and another family relative (often a spouse) still lives there, it would not normally be counted as part of their assets, so you might get full financial support for the ill person. If there is no other family relative (dependent) living in the home, its value is likely to count a part of their capital, and they will have to pay towards their care. HOWEVER, that doesn't mean you have to sell the house. New regulations come in in October but I haven't yet sussed them out. Will post again when I have had time. But one possibility is that you keep the house and the Care Home builds up a debt, and when the house is eventually sold, the proceeds are used to pay off the debt. You might ask what use is that, but if the value of houses continues to rise, a house that you currently have valued at £150,000 might fund 4 years care at todays prices plus inflation, a house still owned in 4 years might give an extra 1 or 2 years care due to it having increased in price.
But you could consider renting out the house rather than selling, and using the income to partially fund the relative's care. You would pay tax on the rental profits (but you'd probably pay tax on the interest in the bank on the sale of the house), and remember that an elderley person gets a higher tax-free allowance than most of us working-age people. But if you rented it out, you'd also benefit from any increase in the price of houses by the time you come to sell it.
I'm no expert, these are just things to think about.
Renting out property incurs either cost or hassle, or both. Tenants can be good or bad. They can default (i.e. not pay), they can cause damage. If you manage the rental yourself you need to collect rents, perhaps sort out repairs, but if you use an agent they will do this for you, but charge a fee. Renting a house out usually means you have to provide a good standard of decor and furniture (if provided), which might cost you money. Nobody in their right mind would want to rent my mother's house in its present state. The rooms are all 1950s style, the central heating is 40 years old (bloody good system, I would say, installed by my dad and his mate Walt), but not efficient any more.
Think carefully about renting out a property, it can be fraught with worry.
There is a lot of stuff on the media at the moment about switching a jointly-owned property from being "Joint Tenants" which most married couples are to being "Tenants in Common". Apparently the latter is better when it comes to talking about Care Homes, but I haven't had time to scrutinise the difference and I am currently not convinced that the difference is relevant for most people. But please do satisfy yourselves of this, and don't rely on me, cos I am not yet sure.
5. Wills. No expert. People tell me to write wills "in trust" for other family members. It seems to me to be a thing to seriously consider, but I do not understand the ins and outs of it.
Basic principles. When a person leaves their estate to their spouse, there is no Inheritance Tax to pay at all. The problem may come when one spouse has died and the living spouse owns the house and all the bank accounts and investments. If these total less than £300,000, or even a bit over, don't worry. But if they total considerably more than that, then when the second spouse dies (and typically leaves the estate to their children or anyone else), there will be inheritance tax to pay, at 40% on the excess over £300,000. So if the estate is, say, £500,000, the Inheritance Tax would be 40% of £200,000, i.e. £80,000.
Some people might say, fair enough. The beneficiaries are getting all that money for no effort on their part, so why shouldn't they pay £80,000 in tax? Some might say it is disgraceful that you can't leave your assets to your children without paying tax. I am not getting into that argument. There are all sorts of things you can do to avoid paying this tax, all legal. Some involve putting the assets into a trust, and if you thing this is for you, please do consult a solicitor who is experienced in trusts. An ordinary local solititor will not do. You need a specialist. Yes, it will cost more, but might be worth it. [words deleted by Bruce]
Another possibility is that when the first spouse dies, having left everying to the second spouse, you can execute a "Deed of Variation", which means the second spouse agrees not to take all the assets themselves, but some of them go to the children instead. This means that when the second spouse dies they don't own so much in their own right, so less tax is payable.
But all of the above needs advice from a solicitor who is experienced in Inheritance Tax. I am not. I can only tell you what the possibilities are and how to seek further help.
Hope the above is helpful. [words deleted by Bruce]Love to you all
Margaret
[Margaret's post has been edited by Bruce - simply to change some of the wording.
While members such as Margaret have some knowledge of specific areas, there are no experts in anything [other than their own situation] on TP, and we always recommend that members take independent advice on all matters, as well as taking on board information presented by other members.
We furthermore suggest that any advice sought here is done in public, as far as that may be possible, in order that other members may provide alternative views. The power of TP is to provide a variety of views, such that members are aware of many things that are hopefully relevant.]
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