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Legal & money

Deprivation of assets

(70 Posts)
pensionpat Mon 14-Sep-20 08:37:58

I have a background in benefits for older people and my understanding, with that of my colleagues, was that there is no legal way to “protect “ property from being required to be sold to pay for care.

Next week we are updating our wills. A close friend who did this last year said that their solicitor had sold them a product, a kind of trust, which meant that whatever happens in the future, they are guaranteed to be able to leave their property to their family. I did not share my concerns. They had already done it.

But it does concern me that a) this company is giving wrong info. and making money out of clients and b) my understanding is wrong and we should at least consider it.

Have the rules changed? Any experiences among GNetters.

Doodledog Wed 16-Sep-20 13:25:37

suziewoozie

The value of a property has not in the majority of cases been paid for after tax. There was tax relief on the mortgage interest for starters and then the increase in value is not taxed at all - and tbats were most of the value is

Tax relief on mortgages was abolished years ago.

The idea that people are sitting on vast amounts of profit may be true in the SE, and is obviously the case for those who bought a while ago in London, or who got council houses at a discount, but in large parts of the country it is simply not the case.

For what it's worth, I would support taxing any profit (although it would need a complicated formula to work out what it means in real terms after interest rates and so on are factored in), but I think this obsession with housing profit deflects from the point I am trying to make.

Let's assume that someone has no house, but has jewellery that they bought with their earned income? Or antiques? Or anything of value? Why should they have to sell it to pay for social care when their taxes have paid into the NHS?

Who should decide what which of our possessions we can keep or pass to our children? Suppose I have my mother's old teddy (Woolworth's - not Steiff) and want my daughter to have it. Is that ok, or does someone else get to tell me that it should be sold if I need care? We might get a fiver for it that would pay for something. Is it just because most people's house is their most expensive asset that housing becomes the focus? The principle is surely the same in the case of the teddy?

suziewoozie Wed 16-Sep-20 13:30:03

My guess is that many of us on GN benefitted from MIRAS. I also made the point upthread that geography played an important part in the value of a house. Because people in some areas have benefitted less, doesn’t make the basic principle incorrect

suziewoozie Wed 16-Sep-20 13:31:52

And your teddy point is frankly reductio ad absurdum

Doodledog Wed 16-Sep-20 13:48:19

Is it? When talking about a moral imperative, principle has to come into play, surely?

I get the impression that you are arguing for the sake of it, as you continually refuse to address the point I am trying to make, instead concentrating on what you see as the injustice of the housing situation in the UK.

For avoidance of doubt - my question is:
Should people be expected to sell all of their belongings in order to pay for social care, and if not, what should they be allowed to keep, and on what grounds have these items been selected?

suziewoozie Wed 16-Sep-20 14:56:19

I think we can both agree that the funding of social care is a mess which no government of any colour has had the political courage to address despite the demographic changes being so clear.

The current system is riddled with inconsistencies and unfairnesses, including differential treatment of assets for residential and domiciliary care and the way self funders in mixed homes subsidise publicly funded residents.

My position is that social care should be treated like health care because it is such a lottery of whether it will be needed or not. Therefore the care elements should be free at the point of use.

In order to meet these costs, I would examine restructure inheritance tax to make it much fairer and much more difficult to avoid,

Valuable teddy bears would of course form part of the estate .

suziewoozie Wed 16-Sep-20 14:58:56

I realise that there are zillions of missing details in this but my basic principles are that all types of social care should be treated like health care and the costs met from taxation not individuals assets

Davidhs Wed 16-Sep-20 15:10:22

Private houses and some other property being exempt from CGT encourages investment for the long term, changing those concessions has a downside. Removal would immediately make home ownership less attractive, the value would fall causing major negative equity on any loans, reduce the amount available for care and making spending all from month to month more attractive.

Because of this even a Labour government would think twice before changing CGT.

suziewoozie Wed 16-Sep-20 15:30:35

I’m not suggesting houses are unexempted - I was questioning the idea that the value they have is a simple reflection of hard work and not geography and luck.

Doodledog Wed 16-Sep-20 17:35:19

suziewoozie

I’m not suggesting houses are unexempted - I was questioning the idea that the value they have is a simple reflection of hard work and not geography and luck.

I really don't think that anyone was saying otherwise, though.

I agree that taxation needs to be overhauled, and that ways should be found to prevent fraud. I would need to see the detail of a restructure of IT, as it is very difficult to know what is 'fair'.

Predictably, however, I would not want to replace what we have with another system based on subjective decisions about how we should be allowed to spend our (taxed) money without penalty. The trick should be to tax it fairly in the first place, and then let people spend it as they see fit.

suziewoozie Wed 16-Sep-20 20:47:01

My post was to David

suziewoozie Wed 16-Sep-20 20:50:05

How can you make decisions related to fairness if some people’s assets are depleted by needing care because of eg dementia and others never need care? That’s a basic unfairness - or do you believe the NHS should also be abolished and replaced by a US style system?

M0nica Wed 16-Sep-20 21:57:38

When I said 'fortunate', I did not mean anything more than they were actually able to buy a house, even if it required skimping and saving. For many families now and then the idea of being abe to buy a house is a dream. Even with scrimping and saving they could never raise a deposit or afford a mortgage. I do not see why these people should have to fund through their taxes the care of people who have been fortunate to reach an income, however meagre that meant they were able to buy a house. Of course there will be exceptions.

My children know that as much as we would like to pass on our assets, if we both need to go into care for a prolonged period there will be little left, but they are both homeowners, and have professional jobs, not rich by any means, but not in poverty and can see how outrageous it would be to expect those on much smaller incomes than them or us to pay for our care so that they can pocket a nice lump sum.

Doodledog Wed 16-Sep-20 22:24:24

We are back to houses again, though grin.

Ok, M0nica, if you hadn't bought a house, but instead had invested in rare first editions, or fine wines (or whatever), should you be made to sell them in order to pay for care? What about less valuable items? Where would you draw the line?

Are you suggesting that there should be no inheritance allowed at all? Your children may be in professional jobs with their own homes, which is great, but at least in part must be because you helped them one way or another? Isn't that a form of inheritance?

As I have said, the rich will always be ok, the poor will have nothing to leave, so as ever it is the 'squeezed middle' who will end up back at the first square on the snakes and ladders board. Means testing keeps people 'n their place'.

Davidhs Thu 17-Sep-20 07:17:51

I'm an ideal world it would be good to fund personal care from general taxation, or a mandatory insurance scheme, successive governments have not taken that view. So we have a system that the bad luck of not dying quickly means the assets have to used to pay for care, if the relatives can’t or won’t do it.

Would a Labour government change the system?. There doesn’t seem to be an obvious ideological reason to raise taxation to help the home owners pass assets to their family.

So the lottery remains

LadyStardust Thu 17-Sep-20 20:06:56

Some interesting thoughts and ideas! Thank you to those people who addressed my question. I am not rich and have never been so! My house is probably worth around £100,000 if that! Both my parents and in laws lived in council houses, so we have never inherited anything. We both worked all of our lives and have never claimed any benefits. I would just like to make sure my children have something to make their lives easier as neither of them have a great deal of money and how on earth they are ever going to get on the property ladder, God only knows! The Government can have my private pension and my state pension. Surely that's enough!

M0nica Fri 18-Sep-20 09:16:16

Doodlebug Any assets you have, have to be sold to pay for your care until the value of your remaining assets falls to £27000, whether house, jewellery or fine wine.

I have no problem with this and never have. When members of my family went into care, their houses were sold because they would not be living in them again and so became just a cash asset, even though, in at least one case, this was not necessary to fund the care home fees.

I understand the sadness when there is a family home that has been passed down the family for many generations, but such properties are very rare. In the man elderly family member dies their house is sold because they no longer live there and the value of the estate, almost entirely the house, has to be divided between all the children.

I am quite happy with the rules as they are at present and do not understand why houses should be treated as sacred cows in this situation, they are part of a person's assets and no more.

Barmeyoldbat Fri 18-Sep-20 10:20:50

We have done it. We became tenants in common and have a made a will each leaving our share, in trust, to our son. So if one of us goes into a care home they will then only count half the house value. We have done this while we are both in reasonably good health so it won't count as deprivation assets.

On another example my daughter was left a large amount of money when her husband died and she is receiving a large amount of care. We were able to spend a fair bit of it, almost half legally before we had to pay for care fees. We still paid just under half on her care fees. For example we bought new furniture that was more suitable for her needs and had the whole bungalow floors relayed with a wood floor so there were no trips, easy to clean etc. She was even able to gift a certain amount to her brother and niece. So it can be done but don't go buying expensive art work they won't allow that. I took advice from the councils finance manager as to what I could do and not do.

Floradora9 Fri 18-Sep-20 16:41:05

In Scotland the house does not come into the equation if the remaining spouse still lives in it . This is a big thing to think about of that person decides to downsize then it changes if money left over . All savings are divided in two and only the person in the home pays out of their half.

kittylester Fri 18-Sep-20 16:46:32

In England there is charge put on the house until the last one dies but it isn't just for going into care, it can be for social care too.