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Gifts to adult children recouped by councils

(19 Posts)
notanan2 Mon 18-Mar-19 00:23:28

This comes up regularly. The article is behind a paywall but may drive the message home to people who have trusted bad advice.

It is somewhat irrelevant whether or not you think this should be the case. But the fact is, if you think there is a clever way to ring fense your childrens inheritance so it isnt accounted for if you need care, beware, there are no easy loop holes or smart tricks

Esspee Fri 19-Apr-19 04:21:36

Which is as it should be.

Willow500 Fri 19-Apr-19 05:16:41

We changed our wills some years ago so that only half of our property goes to the other spouse when one of us dies - the other goes to our children with the proviso the remaining parent can stay in the house.

mumofmadboys Fri 19-Apr-19 06:43:14

Doesn't that mean the remaining adult has to pay your children rent for half the house?

BlueSapphire Fri 19-Apr-19 06:59:20

That's what we've done too, Willow. I now own half of the house, and my DS and DD own a quarter each. No mention of rent.....

maryeliza54 Fri 19-Apr-19 07:46:41

The article deals with two issues - one is recouping money that has been given away - one example involved £120,000. The other issue is the one mentioned upthread about leaving half the house to someone so that if the survivor goes into cars only half the value of the house can be used for carehome fees. Councils are increasingly checking up on all these arrangements as their finances are more and more reduced. Every clever device for avoiding care home fees means less money for other vital services.

However there are other issues - for example in this part of the world I would have a far better choice of home if I were paying for myself. The article also makes the point yet again that governments have to grasp the nettle of the whole issue of the funding of social care both for domiciliary and residential. The current situation is incredibly unfair

maryeliza54 Fri 19-Apr-19 07:47:34

mum the rent aspect is related to the IHT rules not care home fees.

maryeliza54 Fri 19-Apr-19 07:53:14

Forget to mention - if you are the surviving spouse, you’ll also have to hope that your children don’t divorce or become bankrupt.

MamaCaz Fri 19-Apr-19 07:56:49

And if the children should hit hard times, and need benefits at some stage, I would guess that owning part of a house that they don't live in could be problematic ... .

maryeliza54 Fri 19-Apr-19 07:59:01

I’d forgotten that possibility Mama

craftyone Fri 19-Apr-19 08:05:56

The best way to take some money out of IHT is to give cash away at least 7 years before dying, a guesstimate of course, always but always leave enough to take care of yourself if you should ever need care or to be in a care home. Realatively small sums can make a big difference to the AC, eg make their own homes cosier, pay off some mortgage. I have given lump sums, 2015 after my husband died. I stopped at the end of the year. Any cash I gave was with the stipulation to use it wisely and they all did. No more since then, I have to look after my own future

I would never give away any part of my house. Maryeliza is right. I honestly think that we should pay for our own care, it might encourage a healthier lifestyle and I don`t honestly believe that the younger generation should pay. We have been the lucky generation, most of us

craftyone Fri 19-Apr-19 08:09:17

Re care fees, the authorities can go back endless years to look for deprivation of assets. Some people are mixing IHT and these fees. Deprivation of assets is far more serious, it means that sona and daughters with a stake in a house given over to them, will be forced to pay for parental care

Niobe Fri 19-Apr-19 08:32:09

Our son has told us not to worry about giving him money to avoid IHT as it will only be payable on money over about
£1 million (I forget the exact level at which it becomes payable ). He says that if he has to pay IHT on anything above £1million then so be it. Similarly with care home fees, our money can be used to pay for the best care for us and he can can have what is left. He would rather we were in an excellent home than a poorer quality one even if it reduces a potential inheritance.
Sometimes we can become too focused on avoiding paying money to the government/council that we lose sight of the bigger picture.

Granny23 Fri 19-Apr-19 08:38:32

LUCK! yes some of us have been lucky but some have not. One of the great unfairnesses is that if you need long term care, because of a wide range of illnesses, then the costs of a Nursing Home will be met by the NHS. If. however, you are suffering from any form of Dementia and there is no longer anyone able to care for you 24/7 at home then you will be required to pay in the region of £1000 per week to move into a Care Home. (except in Scotland where 20% of the cost will be met by the SG under Free Personal Care provisions) You will have to use all your savings, your state, private and works pension (if you have one) towards the costs until your assets are down to around £14,000. Unless you have a spouse or dependant living in your own home then your house will have to be sold to meet your care costs.

it might encourage a healthier lifestyle ???? My experience has been that most of my contemporaries who have died have been physically fit until they have been struck down by a random, or genetic illness. or simply old age. Meanwhile those who are overweight, drink to excess and smoke seem to last much longer.

Liz46 Fri 19-Apr-19 08:46:14

If we give part of our house to our children, they can become liable for capital gains tax.

craftyone Fri 19-Apr-19 08:48:15

That is what savings and pensions are for, why we saved and it is not to give freebies to our children at a huge cost to other peoples children, those that work and pay taxes

You forgot stress granny, some of those who were `fit` may have been over stressed. There is a huge difference between fit and healthy. Stress is the biggest killer of all

maryeliza54 Fri 19-Apr-19 08:48:27

I agree with G23 about the fundamental unfairness of how we fund social care v health care and how we define those in need of the latter. My belief is that all health and social care costs should be funded by the state through taxation - maybe with the introduction of some kind of wealth/ property tax which would be hypothecated. I don’t believe for one moment that we’ll ever have a government with the political courage to do that. So we’re stuck with a fundamentally unfair system that is relatively easy to game although those whose main resource is their house may suffer unintended consequences from trying to play the system. Meanwhile the amounts available to pay for council funded care are just not enough to provide decent care in many homes.

maryeliza54 Fri 19-Apr-19 08:56:44

But crafty it’s not about giving ‘freebies’. A government could choose to fund social care through different taxes that fell on wealth not income. Fairness is about who pays what taxes on what - our current taxation system has moved increasingly over to indirect taxes which fall disproportionately on the poorer. IHT is basically a voluntary tax as it is so easy to avoid.

maryeliza54 Fri 19-Apr-19 09:04:01

And when talking about fairness and freebies, the de facto threshold for IHT with a married couple is now £950,000. How is it ‘fair’ that someone can inherit that huge amount of money tax free when we start paying income tax at incomes of only £12 k? Add in NI and we’re talking paying 32(?) % above that level. And then there are associated costs of working like travel and clothes, child care.