Money causing problems

[Steve698]

I would like to get other opinions in case I'm missing something.

My Mum isn't officially diagnosed with Dementia but is showing the signs, my Dad passed with it in 2013. She was living in her own home until last year but not coping well. She was not eating properly not caring for herself or the home and although my sister and myself tried to do as much as possible she eventually had 2 falls in the garden in mid winter and we sat and decided it would be best if we sold Mum's house and my sister would sell hers and the money pooled and sister, husband and Mum move in together. Mum agreed as long as she had her own space (fair) and sister said she could cope with my help, I live 20 miles away. Plans were made to find a house with enough space to build an annexe and any outstanding proceeds from my Mum's sale be split between sister and I as agreed by Mum (we have LPA). All that has happened, Annexe is not yet built but in planning. Problems came not surprisingly with the money. The balance worked out at £147,500 to both my sister and I. Two days before the balance was due to be paid my sister suddenly stated that she was going to withhold £47,500 from my balance as she was the one caring for Mum 24/7 and the annexe was now going to be more expensive than thought. My opinion is that the annexe is being built as an addition to their house and adding value to it and also that my sister has her full balance plus the added value to her house and is now asking for £47,500 of my balance in addition. She thinks that her 24/7 care of Mum makes that fair.

Now I am full of respect for the fact she and her husband have taken on this task but it wasn't forced on her it was her decision to do so. She and her husband knew an annexe would need to be built and it was never discussed that they expected my half of the balance to pay for that in lieu of the care they provide. We have a strong relationship or at least did have now things are very tense as she thinks I'm a money grabbing B and I think she is being unreasonable to expect to take her share and 1/3 of mine to build something that adds value to her house and I see no return for other than the fact that my Mum is safe and cared for. Because of our strong relationship we did not see the need to get solicitors involved and none of this is in writing (stupid I know).

Any thoughts from anyone outside of this situation would be good to hear, how do we move forward and keep our relationship intact ?

 

[Female1952]

Hi. Others will be along soon to advise you. The first points I would make are these:
1/ You and your sister have LPA so have to act in your mother's best interests.
2/ No one has any inheritance until your mother passes, so your mother's money is still hers.
3/ The amount your mother has invested in the annexe gives her a share in your sister's property. For example, if the annexe is worth 20% of the property, then her 20% ownership should be registered.
4/ Your mother's funds may be needed for a carehome in the future.
5/ Payment to your sister for her care of your mother: I don't know the ins and outs of this but others will advise.
6/ Does your mother have a valid will?
7/ You and your mother need professional and legal advice.

 

[Phil2020]

"None of this is in writing". No. But you clearly had a verbal contract. Speak to a solicitor.

 

[nitram]

I agree with speaking with a solicitor.
Several points need considering.

Your Mum's capacity.
Your actions as attorneys.
Gift of house is a potentially exempt transfer in respect of IHT.
Chance of an LA financial assessment and deliberate deprivation of assets.

EDIT
Regarding paying an attorney have a read through:

Legal problems being paid to care for parent with dementia?

Hi, This is my first time posting in the forum so I hope I'm in the right place. My mother has been diagnosed with Alzheimers and vascular dementia. She lives on her own, and has been coping fairly well, although we have recently noticed a deterioration to the point where she may not be able to...

forum.alzheimers.org.uk

 

[Nuwara]

Hi. Others will be along soon to advise you. The first points I would make are these:
1/ You and your sister have LPA so have to act in your mother's best interests.
2/ No one has any inheritance until your mother passes, so your mother's money is still hers.
3/ The amount your mother has invested in the annexe gives her a share in your sister's property. For example, if the annexe is worth 20% of the property, then her 20% ownership should be registered.
4/ Your mother's funds may be needed for a carehome in the future.
5/ Payment to your sister for her care of your mother: I don't know the ins and outs of this but others will advise.
6/ Does your mother have a valid will?
7/ You and your mother need professional and legal advice.

My brother and i sold the family home using our poa and bought a place near to me so i could help look after mum during the day. Theproperty is owned by mum and my brother lives with her but rents out his own property.

We have kept the excess money from the sale of the house in her savings to pay for care in the future.

Although she would not want to go into a home, even if we considered a live in carer that can be just as expensive. Hence you and your sister might need tthat money to pay for care in future if she becomes to difficult for yoursister to look after.

 

[Steve698]

Firstly I'd like to make it clear I am not accusing my sister or her husband of anything underhand. My mum is not diagnosed, she is 88 and occasionally gets a bit confused and is still reasonably mobile. She doesn't receive any care other than that from my sister and her husband. Mum's mental capacity while not that of a 20 year old is good. We sat after her falls and she agreed she needed some help and would be happy to move in with my sister. She agreed to gift her house, my sister consulted a solicitor beforehand who said this was all ok to do and within the rules so maybe the word inheritance should be changed to gift. Although my Mum lives with my sister her name is not on the deeds. I maybe haven't been as involved as I could have been but before Mum moved I was nearly 50 miles away while my sister was around the corner to her so I may be getting confused with LPA and POA . I have to say though I feel a little uncomfortable with the situation from both a moral standpoint and a legal one, should I be ?

 

[MartinWL]

This is a tangled situation. I am not sure who is paying to build the annexe? I wonder if I have this right:
*Mum decided to gift her house to you and sister.
* Net of expenses you are due £147k each
* Your sister wants a bigger share to reflect the cost of the annexe and her care work.
* Mum has capacity

If this is correct then it is up to your mum how she distributes the proceeds of sale of her house unless she gave it to you legally before the sale. If the house was 50% yours, before being sold, and that change of ownership wa registered, you're entitled to you half share. If it remained in mum's name until sold then it it her money. She can give it to you and sister if she wants to but if she is left without funds that's going to be deliberate deprivation of assets.

Lesson for others, don't do this! Or if you do get legal advice and a written agreement that covers all contingencies.

 

[canary]

I think this is a can of worms. Having an official diagnosis is irrelevant. The fact that you have posted on here shows that you know it is dementia. Sometime in the future your mum will require more help than your sister can provide. When that happens, if your mum has no savings questions will definitely be asked about the gifting of the house.

You need expert advice from a solicitor who understands not only IHT, but also Deprivation of Assets. FWIW, I think the excess money from the sale of the house should be kept by your mum.

 

[Grannie G]

I think the excess money from the sale of the house should be kept by your mum.

I agree. Gifting a few pounds is one thing but gifting a house is a completely different ball game. I`m surprised the solicitor your sister consulted @Steve698 was not more cautious.

This is causing conflict already which shows the arrangements are far from satisfactory.

 

[jaymor]

You can be ordered to repay the donor’s money if you misuse it or make decisions to benefit yourself.

I have taken the above from the Gov.uk site from the information re holding LPA.

 

[MartinWL]

You can be ordered to repay the donor’s money if you misuse it or make decisions to benefit yourself.

I have taken the above from the Gov.uk site from the information re holding LPA.

The POAs didn't make the decision, the mother has capacity. All the same someone is going to ask difficult questions about whether she was influenced.

 

[MartinWL]

I think this is a can of worms. Having an official diagnosis is irrelevant. The fact that you have posted on here shows that you know it is dementia. Sometime in the future your mum will require more help than your sister can provide. When that happens, if your mum has no savings questions will definitely be asked about the gifting of the house.

You need expert advice from a solicitor who understands not only IHT, but also Deprivation of Assets. FWIW, I think the excess money from the sale of the house should be kept by your mum.

I completely agree. Mum should keep all the cash for now and you need a good solicitor to help you sort out the situation. If you don't this could all be disastrous.

 

[nitram]

I have difficulty reconciling this thread with
https://forum.alzheimers.org.uk/threads/moving-into-care-home.109062/post-1527745 .
where you say you are preparing to take your mum, whom you consider to have dementia, to a care home.
Yet 3 years later she has capacity to gift her house.

First post in linked to thread says Steve698's mum, your mum in law, is in a care home.

 

[Phil2020]

@Steve698 ... " ... 50 miles away while my sister was around the corner to her so I may be getting confused with LPA and POA . I have to say though I feel a little uncomfortable with the situation from both a moral standpoint and a legal one, should I be ?"

I think the answer to your question is, unfortunately, yes. It is the 'law of unintended consequences'!

The trouble is that these thing can turn in an instant. You and your sister have obviously tried to work things out together for your mum's benefit which is great - far more than my three siblings are willing to do! But if your mum suddenly needs a care home or nursing home, in calculating whether or not she pays for such things herself, the 'powers that be' can look back for a period of up to seven years for 'assets' - for example, the money and the house - that have been 'taken out' of her estate i.e. all the assets she owned at the start of that time period, to be included in their calculations.

I can't really see the 'gifting' of the £147,000 equity in your mum's property - however it's split between you and your sister - as being a runner. No question in my mind that the 'powers that be' would want to include that in their calculations. If you proceed on the basis you've set out, a worst case scenario could see you and/or your sister being legally required to pay thousands of pounds back to your mum's estate; debts to her estate that could outlast her.

Also - I'm pretty sure but someone will correct me if I'm wrong - gifts of up to £3000 per financial year which might have been given, which can reduce the liability for IHT, can be 're-included' in the estate for the purpose of calculating whether or not a person is responsible for paying for their care unless paid 'more than seven years ago'.

@Grannie G's comment, @canary, above is well worth noting.

Going to a solicitor, familiar with this area of work, with your sister, seems to me to be the most sensible way ahead.

 

[canary]

Actually, @Phil2020 there is no time limit for looking at Deprivation of Assets. The 7year rule is for inheritance tax, not for DoA

 

[Phil2020]

@canary ... I've got no particular knowledge in the area but I think my understanding comes from the idea that if a person doesn't have health problems, dementia, etc when the asset reduction/gift or whatever, takes place - i.e there was no indication that the person would need 'care' at the time of the 'gift' - then it's unlikely to be taken into account as part of the estate unless it falls within the seven year period. If it falls within the seven years, it's far more likely to be considered by the 'powers that be' in their financial calculations. But I accept your point that they can 'look at Deprivation of Assets' (and include any such assets they think are justified) going back to the year dot.

I've only a layman's understanding of these matters & I think consulting a knowledgeable solicitor is the way for @Steve698 & his sister, to go.

 

[jaymor]

The POAs didn't make the decision, the mother has capacity. All the same someone is going to ask difficult questions about whether she was influenced.

Indeed but as her attorneys they have a duty of care and the decision is theirs to say no thank you, so abiding by the terms of the LPA.

 

[jugglingmum]

The seven year rule is definitely only for inheritance tax, there is no 7 year rule for deprivation of assets and 7 years have nothing whatsoever to do with it.

IHT (inheritance tax) and deprivation of assets rules are completely separate and the only overlap is they have a bearing on the same money pot.

Arguably if you need to consider IHT then there is no risk of deprivation of assets as you are likely to have sufficient funds for care.

From an IHT gifts point of view the giftee has to have capacity to make that gift at the time it is made, and it really should be actioned by the giftee to make it valid. A bank transfer made by a POA might not be deemed a valid gift by HMRC as it needs to be actioned by the giftee. Best practice is for the giftee to write a note/letter to confirm the gift has been made.

My MIL gifted some monies in 2019, she posted cheques and letters to confirm the nature of the gift. She still needs to live 7 years from date of the gift (potentially exempt transfer) for it to be of tax benefit.

As far as deprivation of assets is concerned, you shouldn't gift monies which might be needed for your care when the need for care can be forseen. This applies to any frailty whether it be dementia or just old age, so once past a certain age my understanding is that making gifts at that stage would fall foul or deprivation of assets. My thoughts are that if you are over 80 then you might well need care and shouldn't be giving large sums away.

As above MIL gifted some monies in 2019 but has retained sufficient to allow for 10 years worth of care (including her annual income).

In the scenario outlined all the gifts mentioned to my mind are deprivation of assets, and the LA might seek to realise the monies invested in the house.

Solicitors are not normally qualified to advise on tax matters, and few seem to have much knowledge of deprivation of assets.

 

[nitram]

the LA might seek to realise the monies invested in the house.

There appears to be a fair amount of capital after the house purchase

Problems came not surprisingly with the money. The balance worked out at £147,500 to both my sister and I.

although unclear of it's origin

we sat and decided it would be best if we sold Mum's house and my sister would sell hers and the money pooled

 

[Steve698]

I have difficulty reconciling this thread with
https://forum.alzheimers.org.uk/threads/moving-into-care-home.109062/post-1527745 .
where you say you are preparing to take your mum, whom you consider to have dementia, to a care home.
Yet 3 years later she has capacity to gift her house.

First post in linked to thread says Steve698's mum, your mum in law, is in a care home.

This post was written from my wife's pov about her Mum who is diagnosed with dementia and has been in a care home from that date, her house was sold to pay for that care but is running out fast.
Here I am talking about my Mum. My Dad also passed after a short time in a care home also with dementia so we have had our fair share of this awful disease.