You may be aware that care homes run by local authorities use a means-tested system to determine how much someone should pay towards their own care fees. Published: 02:47 EST, 17 June 2019 | … No one likes to pay tax unnecessarily, but handing over money simply to avoid tax – particularly inheritance tax – may cause more problems than it solves. Alex Edmans, head of retirement at Saga Personal Finance, says: "Inheritance can be an emotive issue. "Relying on your child to do the right thing can be disastrous, as one of this firm’s clients found out to his detriment after he realised his son had met a foreign lady, sold the house and taken the deposit with him to another country.". Tenancy in common – solution to avoid selling my house for care home fees? Annie Shaw writes a column in Saga Magazine. You may hope for help with care home fees from your local authority, but this is means-tested and thresholds are very low. If you declare the money to be a gift, but it isn’t, that’s mortgage fraud. Click and ask me a question or call me now on 0333 344 3234 (local call rate) and I'll happily help. Things you need to know before signing property over to your children. For recipients of a "Homegift" as described above, there are two potential problems. The Care Act sets the national rules for paying for care home fees. Hampshire-based solicitors Donnelly & Elliott warn: "A gift of money leaves you with no control of it, which can be disconcerting if, for example, the son or daughter is buying the property with a friend or partner, or if they’ve shown signs of not being able to deal with their finances in the past. If you want to avoid being surprised by rising nursing home care costs and have the ability to pay for your care… There are certainly ways to minimise tax while maximising control and still meeting your objectives. Hi there, I'm {TITLE}. Although this number varies geographically, it's a substantial amount. Older people have, by definition, less time left in their lives to recover from poor financial decision-making or adverse events. Do you need any help? Again, the payment must be made directly to the care provider, the institution providing the medical care, or to the company providing the medical insurance. Book a free mortgage consultation with our panel mortgage broker today and see what the best mortgage rates are for you. For example, parents can gift houses to their children. Beware, too, of giving children money towards a property so they can get a better mortgage rate with a bigger deposit, and expecting to get the money back at some time in the future. I have been approached by a firm promoting this solution – it isn’t widely publicised and sounds too good to be true. If the care is outside their home, these assets include the value of their property. Residential care is expensive and many care home residents have to sell their property and other assets in order to be able to meet care home fees. Five things you might consider among other options include: Our registered office is 3rd Floor, 86-90 Paul Street, London, EC2A 4NE and our trading address is 19 Silwood Road, Ascot, Berkshire, SL5 0PY. We find that many of the consequences can be over-looked. But all is not plain sailing, particularly in respect of property purchases. Fees are around £560 per week . Nursing Home Care. If someone intentionally reduces their assets - such as money, property or income - so these won’t be included in the financial assessment for care home fees, this is known as ‘deprivation of assets’. People often do not realise that deliberately exhausting their pension savings could mean they lose any entitlement to means-tested benefits, potentially leaving some to survive on a reduced state pension. There have even been cases of people ‘selling’ houses to a relative for a nominal fee in order to transfer legal ownership. Costs average around £600 a week for a care home place and over £800 a week for a place in a nursing home. Whether you have ‘deliberately deprived’ yourself of your own money comes down to motivation. Care Home Fee Planning. Higher-rate taxpayers receive a further rebate for themselves when they submit their self-assessment details. 19 April 2017 at 7:50PM edited 30 November -1 at 12:00AM in Pensions, Annuities & Retirement Planning. We will review your situation and keep you regularly updated, discussing progress in a clear and approachable manner. Beware of taking drastic action to avoid the cost of care. She is 91 and in robust health for her age . It costs to live anywhere so one has to offset expenditure of living at home and all that entails, added to rent and any social and/or nursing care required against care/nursing home costs. At the point the capital was disposed of could the person have a reasonable expectation of the need for care and support? There’s not much point in giving money to one charity if you find yourself so hard up that you end up becoming the recipient of support from another. Buying a car with your savings before the assessment for care fees could be considered a deliberate deprivation, for example. You may not actually know what the full price of your property is so how do you know if you have gifted the property undervalue? American Council on Aging. It could be tempting to give away or sell your house to relatives to avoid the fees to avoid paying the full cost of care. Consequences can be over-looked are regular cash gifts a deliberate deprivation, for example then remained in the home 7. Trying in one way or another to accumulate as much money as a gift but... Self funding in her care home fees, a BBC Investigation reveals yourself of property... 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