Fair Deal/Nursing Homes Avoiding Fair Deal costs

[Roro999]

A friend of mine has heen diagnosed with a serious illness. Is it legal to have all assets transferred (to his children) in excess of 5 years of entering a nursing home ? Max assets amongst the children would fall under their individual thresholds. If legal, are there benefits to having had it distributed before entering a nursing home.

 

[DannyBoyD]

Why would you think giving away your assets is illegal?

Foolish maybe, but not illegal.

Its your property, dispose of it how you wish.

Of course if the recipients were trying to evade paying tax, that's a different story.

So far as Fair Deal is concerned, assets are assessed back by 5 years; so if you gave away 20k three years ago, your means will be assessed as though you still had that cash.

 

[Roro999]

Thanks. No question of the children trying to evade tax. Any comment on my last sentence in my query.

 

[Slim]

Your last line is linked to your 3rd line. The 5 year limit means the assets will not be taken into account for FD. Other benefits may arise if the friend loses the ability to control own affairs. Of course, some thought needs to be given to the desirability of shedding so much assets, family dynamics, leaving the friend without much in the way of assets. Overall, though, it's a good idea.

 

[Roro999]

Your last line is linked to your 3rd line. The 5 year limit means the assets will not be taken into account for FD. Other benefits may arise if the friend loses the ability to control own affairs. Of course, some thought needs to be given to the desirability of shedding so much assets, family dynamics, leaving the friend without much in the way of assets. Overall, though, it's a good idea.

Thanks. If assets are distributed in a timely fashion to avoid FD does the State pay for nursing home care ?

 

[POC]

Even if there are no assets, he'd have to pay a percentage of his income/ pension.

 

[Slim]

Thanks. If assets are distributed in a timely fashion to avoid FD does the State pay for nursing home care ?

Somewhat, the remaining income and assets are assessed under the FD scheme. At a minimum, 80% of 50-100% of his/her income will be required to be paid towards nursing home care plus a percentage (7.5%) of any remaining assets, over the threshold (36k/72k) etc.

 

[Deauville]

I’m curious as to how it works.

What happens if there was a gift that is in excess of the 36k/72k within the 5 years and 0 liquid assets are reached ?
The person or couple are still in fair deal.

 

[Slim]

I’m curious as to how it works.

What happens if there was a gift that is in excess of the 36k/72k within the 5 years and 0 liquid assets are reached ?
The person or couple are still in fair deal.

In this case, the asset disposed of within the 5 years will be included in the financial assessment. A PPR will be included for 3 years.

 

[Deauville]

I understand that but if after say 4 years the balance of liquid assets have dropped to zero due to a gift eating into more than the exception.
Now there are no liquid assets.
The 22.5 % of PPR has been accounted for
and the couple are still in FD.

What happens next ?
Is the maximum penalty for gifting liquid assets to family only 36k/72k.
Does this question make sense ?
My apology if not.

 

[Premos]

My understanding is that the money will still be due, for example when the house or any other non liquid assets is sold. The money due for the house is capped at 22.5 per cent but not for the other assets (except farm and business). There's a claw back on the estate when the person dies.

 

[Slim]

Is the maximum penalty for gifting liquid assets to family only 36k/72k.
Does this question make sense ?
My apology if not.

The 36/72 are the amounts of savings discounted in the financial assessment: 72 for a couple, 36 for solo. If the cash runs down but is still assessed, the person still owes the money and it can come from the 20% of income or the 'Nursing Home Loan' can be applied for, which will be discharged on the death. Of course, the additional assessment of the gifted assets can be adjusted each year as the 'notional' amount dwindles.