| Care Home fees and Inheritance Tax 14:28 - Jul 26 with 3986 views | johnlangy |
There's a few people on here with legal knowledge plus there are possibly some others who have come across the situation i'm in at the moment (along with my brother and sister). So i'd be interested in whatever info you can pass on.
It's looking pretty certain that our eldest brother will soon be going into a care home. We know that some of the value of his house (the amount above £50,000) will be taken toward the costs (it's a chalet type place so only worth around £80,000).
But on top of that he has some money in the bank which i've been told will also be taken to help toward costs.
When I spoke to the person who told me the above I said that my brother was planning on gifting £3000 to one of us, which is allowed in any one financial year. But he's also going to gift another £3000 for the last financial year, 24/25, which is also allowed. You can only go back one year.
The person said that that is to do with inheritance tax and is different from the care home question. She said they (the council) will still expect the full amount including the £6000 to be put toward the care home fees. So if we were to spend the £6000 we'd have to replace it.
This is what I don't understand. The legal, annual gifting allowance is £3000.
So my question is, if you are legally allowed to make those gifts what difference does it make if afterwards you end up having to go into a care home ?
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| Care Home fees and Inheritance Tax on 14:53 - Jul 26 with 3920 views | onehunglow |
I hope the right decision is made first
I read that Burnham has his eyes on a Care tax
Worth looking out for | |
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| Care Home fees and Inheritance Tax on 15:29 - Jul 26 with 3896 views | ReslovenSwan1 |
It is interesting to compare care home costs with just downsizing and renting.
If my family downsized sold their house for day £200,000 and rented a bungalow.
That would cost £1000 and with rates insurance and all the rest £2000 pcm.
The money would come from your pocket. Add to that meal on wheels.
You are then well into the £4000 pcm the care homes charge. It is an entirely natural process .
My friend went into a home at 63 years after a stroke. He sold his house and they are running down his assets until they are all gone. He cashed in his pension to buy a house.
Civil service people have a big advantage as they have another £1000 with occupational pension and state pension of around £1000.
Of you are younger like my friend it is different . |  |
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| Care Home fees and Inheritance Tax on 15:59 - Jul 26 with 3866 views | majorraglan |
John,
You need to get professional advice on this, the Citizens Advice Bureau would be a good starting point, but you may need an accountant.
I’m not an expert on this, but it’s my understanding that the gift allowance is completely different to the care home issue. Your brother can legally gift up to £3,000 tax free in a 12 month period and that is purely a tax issue, however the council, when looking at things from a care home charge perspective may take your brothers gifting of the money as asset disposal and it’s my understanding that they can seek to recover the money as part of your brothers contribution to his care costs.
I know people have transferred their house to their kids before now to avoid care home fees and I believe there was a 14 year cut off point, but it’s my understanding if the transfer was made deliberately to avoid care home fees the 14 year cut off goes f count and they can go back further. I’d be interested to know how you get on. | | | |
| Care Home fees and Inheritance Tax on 16:01 - Jul 26 with 3859 views | Whiterockin |
I would say take legal advice and definitely not take word of mouth from someone who probably has an opinion but little knowledge. You should get a free 30 minute consultation with a legal firm to outline what is available and what options you have for your personal circumstances. My wife and I did this then paid about £1,600 to future proof for our family inheritance long term. That included wills, POA's and inheritance structure, which included changing our property ownership to "tenants in common". Your legal adviser will explain the reasons for the last sentence. |  | | |
| Care Home fees and Inheritance Tax on 17:49 - Jul 26 with 3758 views | johnlangy |
| Care Home fees and Inheritance Tax on 15:59 - Jul 26 by majorraglan |
John,
You need to get professional advice on this, the Citizens Advice Bureau would be a good starting point, but you may need an accountant.
I’m not an expert on this, but it’s my understanding that the gift allowance is completely different to the care home issue. Your brother can legally gift up to £3,000 tax free in a 12 month period and that is purely a tax issue, however the council, when looking at things from a care home charge perspective may take your brothers gifting of the money as asset disposal and it’s my understanding that they can seek to recover the money as part of your brothers contribution to his care costs.
I know people have transferred their house to their kids before now to avoid care home fees and I believe there was a 14 year cut off point, but it’s my understanding if the transfer was made deliberately to avoid care home fees the 14 year cut off goes f count and they can go back further. I’d be interested to know how you get on. |
Thank you for the reply major.
My understanding coincides with your second para. I will ask the CAB or someone knowledgable in these things for advice.
Re the house, we've already transferred ownership to our son (with caveats - he doesn't like us much  ) and we'll hopefully live long enough not for it to be considered a tax ploy.
I'll come back with solid info as and when I find out myself. Many of us may/will end up in a similar position. | | | |
| Care Home fees and Inheritance Tax on 17:51 - Jul 26 with 3755 views | johnlangy |
| Care Home fees and Inheritance Tax on 16:01 - Jul 26 by Whiterockin |
I would say take legal advice and definitely not take word of mouth from someone who probably has an opinion but little knowledge. You should get a free 30 minute consultation with a legal firm to outline what is available and what options you have for your personal circumstances. My wife and I did this then paid about £1,600 to future proof for our family inheritance long term. That included wills, POA's and inheritance structure, which included changing our property ownership to "tenants in common". Your legal adviser will explain the reasons for the last sentence. |
Thank you also to you wr. See my reply to major. I'll pass on any good info I get which will be of help to others in the future. | | | |
| Care Home fees and Inheritance Tax on 18:03 - Jul 26 with 3731 views | max936 |
| Care Home fees and Inheritance Tax on 17:49 - Jul 26 by johnlangy |
Thank you for the reply major.
My understanding coincides with your second para. I will ask the CAB or someone knowledgable in these things for advice.
Re the house, we've already transferred ownership to our son (with caveats - he doesn't like us much ) and we'll hopefully live long enough not for it to be considered a tax ploy.
I'll come back with solid info as and when I find out myself. Many of us may/will end up in a similar position. |
How did you sort out the transfer of the house to your son?, we want to do that here, as long as its not going affect him tax wise and there's always the chance that we'd want to move at some point |  | | |
| Care Home fees and Inheritance Tax on 18:20 - Jul 26 with 3703 views | union_jack |
| Care Home fees and Inheritance Tax on 18:03 - Jul 26 by max936 |
How did you sort out the transfer of the house to your son?, we want to do that here, as long as its not going affect him tax wise and there's always the chance that we'd want to move at some point |
You could transfer using the 7 year rule tapered tax relief. If you and your wife live for 7 years it is not subject to IHT.
You’d need to check whether or not you can legally still have a claim to live there though as that maybe prohibited.
This is just for info. Make sure you get proper legal advice as things change all the time. You’ve got a starting point on which to start your discussions which could then be confirmed or ruled out by said legal adviser. |  |
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| Care Home fees and Inheritance Tax on 18:41 - Jul 26 with 3657 views | trampie |
Apparently people need to tread carefully as local authorities look closely for what they call 'deliberate deprivation of assets'.
As mentioned Citizens advice (if they are still going) might be a good place to start. |  |
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| Care Home fees and Inheritance Tax on 20:18 - Jul 26 with 3583 views | trampie |
| Care Home fees and Inheritance Tax on 18:20 - Jul 26 by union_jack |
You could transfer using the 7 year rule tapered tax relief. If you and your wife live for 7 years it is not subject to IHT.
You’d need to check whether or not you can legally still have a claim to live there though as that maybe prohibited.
This is just for info. Make sure you get proper legal advice as things change all the time. You’ve got a starting point on which to start your discussions which could then be confirmed or ruled out by said legal adviser. |
I'm sure I've heard in the past that although the 7 year rule does apply to other 'assets' that it does not apply to a house as regards dodging care home fees and like you mention people might be on dodgy ground if you sign the house over but still live in it. | |
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| Care Home fees and Inheritance Tax on 20:26 - Jul 26 with 3566 views | Whiterockin |
John you can see by what people are posting professional advice is the only answer. | | | |
| Care Home fees and Inheritance Tax on 20:35 - Jul 26 with 3543 views | Whiterockin |
| Care Home fees and Inheritance Tax on 20:18 - Jul 26 by trampie |
I'm sure I've heard in the past that although the 7 year rule does apply to other 'assets' that it does not apply to a house as regards dodging care home fees and like you mention people might be on dodgy ground if you sign the house over but still live in it. |
There are complexities, but as a general rule the 7 year or "reasonable period of time" applies only to inheritance tax and does not count against care home fees. There are other measures you can take but it depends on your assets and family circumstances. As I say individual legal advice is essential because what is right for one is not necessarily correct for another. | | | |
| Care Home fees and Inheritance Tax on 21:29 - Jul 26 with 3490 views | 3swan |
| Care Home fees and Inheritance Tax on 20:35 - Jul 26 by Whiterockin |
There are complexities, but as a general rule the 7 year or "reasonable period of time" applies only to inheritance tax and does not count against care home fees. There are other measures you can take but it depends on your assets and family circumstances. As I say individual legal advice is essential because what is right for one is not necessarily correct for another. |
Agree 100% that professional advice is needed.
Just to add that if the gift of £3000 x 2 is considered as avoiding care home fees it can be investigated and taken into account
I think it's called deliberate deprevation of assets | | | |
| Care Home fees and Inheritance Tax on 21:29 - Jul 26 with 3490 views | JJBomber |
| Care Home fees and Inheritance Tax on 20:26 - Jul 26 by Whiterockin |
John you can see by what people are posting professional advice is the only answer. |
Inheritance tax starts on estates above £325,000. An £80,000 house and some money in the bank doesn't even come close to being taxable. | | | |
| Care Home fees and Inheritance Tax on 21:33 - Jul 26 with 3485 views | Whiterockin |
| Care Home fees and Inheritance Tax on 21:29 - Jul 26 by JJBomber |
Inheritance tax starts on estates above £325,000. An £80,000 house and some money in the bank doesn't even come close to being taxable. |
Unless of course the person receiving the inheritance is way above the threshold and the full wack becomes taxable, as I say take advice and future proof. | | | |
| Care Home fees and Inheritance Tax on 22:46 - Jul 26 with 3437 views | JJBomber |
| Care Home fees and Inheritance Tax on 21:33 - Jul 26 by Whiterockin |
Unless of course the person receiving the inheritance is way above the threshold and the full wack becomes taxable, as I say take advice and future proof. |
It's irrelevant what the receiving person has. IHT only refers to the estate, not the beneficiaries. | | | |
| Care Home fees and Inheritance Tax on 07:15 - Jul 27 with 3314 views | Whiterockin |
| Care Home fees and Inheritance Tax on 22:46 - Jul 26 by JJBomber |
It's irrelevant what the receiving person has. IHT only refers to the estate, not the beneficiaries. |
Obviously, but if the person receiving the inheritance has already plans in place to minimise their own personal liability for IHT, any extra income could result in a tax liability. Future proofing is key and as I continually say everyone is different take legal advice. Anyway this is getting silly and should not be about people trying to score points. Im out and will PM John later. | | | |
| Care Home fees and Inheritance Tax on 08:41 - Jul 27 with 3271 views | trampie |
| Care Home fees and Inheritance Tax on 07:15 - Jul 27 by Whiterockin |
Obviously, but if the person receiving the inheritance has already plans in place to minimise their own personal liability for IHT, any extra income could result in a tax liability. Future proofing is key and as I continually say everyone is different take legal advice. Anyway this is getting silly and should not be about people trying to score points. Im out and will PM John later. |
Don't forget to give the pros and the cons, no guarantee of avoiding care home fees as the council can still rule it as deprivation of assets and even if they don't rule it deliberate deprivation of assets then apparently only half the property is covered from care home fees.
Then there are horror stories of divorce (not the original owners but whoever the other half of the property is going too), then they may have or get into debt, then one of the two parties might want to sell and the other doesn't etc etc. | |
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| Care Home fees and Inheritance Tax on 09:37 - Jul 27 with 3239 views | johnlangy |
A number of people have mentioned going down the solicitor route in regard to the transfer of ownership of our house to our son. FYI we have already done this.
I imagine there are lots of caveats that can be included in the transfer but the main one that we've included is that we can both stay in the house for our lifetimes. | | | |
| Care Home fees and Inheritance Tax on 09:41 - Jul 27 with 3234 views | johnlangy |
| Care Home fees and Inheritance Tax on 18:03 - Jul 26 by max936 |
How did you sort out the transfer of the house to your son?, we want to do that here, as long as its not going affect him tax wise and there's always the chance that we'd want to move at some point |
Bore da max. I've just posted that we went through a solicitor for the transfer.
I'd definitely recommend doing that and being thoroughly prepared with all the questions you can muster when meeting them. | | | |
| Care Home fees and Inheritance Tax on 12:58 - Jul 27 with 3165 views | AnotherJohn |
The other issue to consider is the reason for entering care, and whether the person concerned is eligible for NHS continuing healthcare (CHC). This would probably depend on a clinical diagnosis. Persons eligible for NHS CHC would not be required to pay care fees. Probably, it has already been determined that the elder brother is not eligible, but it is worth double checking. It is claimed that many people who are eligible do not explore this route. | | | |
| Care Home fees and Inheritance Tax on 19:03 - Jul 27 with 3047 views | jack_lord |
That is the case with one of my wealthier friends. The mum was clearly deteriorating needing care and they were not interested until they got a clinical diagnosis that passed the burden on to the state. They even put the house in to trust
I'm not sure how I feel about the whole thing. Should the state fund how old, should the whole sector move in to public ownership to nullify the private charlatans - should we be making provision ourselves like we do with private pensions. I have no idea but I do know that there are people who know how to work around it. |  |
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| Care Home fees and Inheritance Tax on 20:30 - Jul 27 with 3013 views | onehunglow |
If you’ve worked all your life then you are fair game
If never worked State will help you out all your life
It’s a choice
I detest spongers | |
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| Care Home fees and Inheritance Tax on 01:52 - Jul 28 with 2930 views | Cornys_Elbow |
| Care Home fees and Inheritance Tax on 21:29 - Jul 26 by 3swan |
Agree 100% that professional advice is needed.
Just to add that if the gift of £3000 x 2 is considered as avoiding care home fees it can be investigated and taken into account
I think it's called deliberate deprevation of assets |
Spot on was wondering when deliberate depravation of assets would
appear or as I call it not doing what the govt want you to do with assets.
Legal Advice essential also a probte expert for trusts and gifting beneficiaries,
Gifting a charity can also help
The state will look at mental capacity if all is OK a simple expression of wishes
signed by solicitor and witnessed can also help with Gifting.
If lasting power of attorney has been granted to family members who then
start to make the changes then prepare for interrogation. I remember
once being advised if you can demonstrate considerable hardship and how
Benefitting from an estate could significantly impact hardship then this may
also help.
Awful situation. Sure there was allowance and pensions used to top up.
All the best. | | | |
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