# Relative in a nursing home under Fair Deal scheme wants to gift me money



## The Ghoul (21 Mar 2013)

I have a close relative in a nursing home under the Fair Deal scheme who is talking about giving me cash deposits now instead of leaving it for me to inherit. The person is _compos mentis*.*_ It's very possible that they will live for many years in this home but they may reach a stage where they are _non compos mentis._

They want to gift around half of their deposits to me alone now which will still leave plenty to pay for the nursing home for several years. They think that gifting it will make things "simpler" and think that the CAT rate will go up in subsequent budgets - a prediction I agree with.

A few questions
1) apart from taking advantage of a possible lower CAT rate now, are there any other advantages/disadvantages to getting a gift compared to getting an inheritance.

2) I have already used up my CAT exemption threshold. If I get this new gift I'll have a CAT bill of approx 100k. Naturally, I would like to avoid this but i don't think it is possible. Would getting professional advice be of benefit. I don't want to pay a tax advisor/planner to tell me that yes, I do owe 100k and his fee.

3) The Fair Deal scheme has a "5 year rule" to capture asset transfers for calculating contributions to nursing home care. I'm not sure how it is calculated however - does the same rate apply for transferred assets as for assets that you hold
eg Person A is in nursing home and has 100k of assessable assets. They pay up to 5% or 5000 of the value of these assets per year towards their care
or 
Person A gave 100k to Person B in the last 5 years. Does Person A still pay 5000? Or some smaller figure? 

4) Related to question 3, if the person lives long enough that they run low on money and the HSE are still demanding the contrbution, what happens if I give them back the money they gave me or pay the HSE myself. Do they now pay CAT themselves. I think they do. If I've paid 33% CAT on the gift going one way and they've paid 33% CAT on the gift going back and the HSE wants its 5% per year of the original gift from "someone" - that sounds like a bad situation. 

PS if anyone thinks that I'm trying to take advantage of an elderly relative you couldn't be more wrong.


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## The Ghoul (24 Mar 2013)

Anyone got any comment, advice or criticism on any of this? Should the Fair Deal stuff be posted in the Welfare and State Benefits forum?


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## twofor1 (24 Mar 2013)

The Ghoul said:


> They think that gifting it will make things "simpler"


 
As your relation is compos mentis, you should have no problem convincing him/her that gifting you this money now would complicate and not simplify matters for all the reasons you state in your questions.


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## Bronte (25 Mar 2013)

The Ghoul said:


> Anyone got any comment, advice or criticism on any of this? Should the Fair Deal stuff be posted in the Welfare and State Benefits forum?


 
I've no idea about the fair deal scheme.  

One comment though as you've asked. If it's possible this person will live longer than expected and therefore might need the money (you mentioned you paying it back in this situation) than that person shouldn't transfer the money in the first place I would have thought.


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## The Ghoul (25 Mar 2013)

Bronte said:


> I've no idea about the fair deal scheme.
> 
> One comment though as you've asked. If it's possible this person will live longer than expected and therefore might need the money (you mentioned you paying it back in this situation) than that person shouldn't transfer the money in the first place I would have thought.


Yes but if they give me a gift and 5 years later are still in the nursing home, AFAIK the gift no longer counts as part of their means (assuming that they can then reapply for the Fair Deal scheme)

To be blunt about this we want to minimise the amount of money that we handover to the HSE and Revenue here. 

The Fair Deal seems to punish those who lived a frugal life and saved their money while rewarding those that saved feck all, hid assets or have a very valuable home and not much else. 

There is talk of the contribution being increased now too, for existing nursing home FD residents as well as new ones. Meanwhile those in under the old subvention system on favourable conditions will not be asked to contribute a cent more.

FD scheme still preferable to the subvention system for many people however.


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## irishmoss (25 Mar 2013)

He is in the nursing home under the fair deal. This means the HSE has full details of his assets. He has been assessed to pay a given amount based on his assets. At the moment that is the rate he will pay until he passes away.
If he gives you money and he is then left with no money to pay his account to the nursing home, I'm sure someone would have to step in and pay those fees as these are private nursing homes. The state portion will be given as usual to the private nursing home but the shortfall will have to picked up by you
That could all be well and dandy now but who knows how the fair deal will turn out. Their is a review of the system going on as far as I know so who knows what nursing home fees are going to be like. As you will loose 33% of his assets to CAT this doesn't sound like a good idea to me.


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## irishmoss (25 Mar 2013)

He has already been assessed on his means that will never change except where you have accumulated more assets through an inheritance say.

If he runs out of money another means test will be done but they will want to know where the money went

After his death the HSE do some checking again AFAIK as a relative told me she had a lot of trouble with the HSE after her mothers death



The Ghoul said:


> Yes but if they give me a gift and 5 years later are still in the nursing home, AFAIK the gift no longer counts as part of their means (assuming that they can then reapply for the Fair Deal scheme)


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## twofor1 (25 Mar 2013)

The Ghoul said:


> To be blunt about this we want to minimise the amount of money that we handover to the HSE and Revenue here.
> 
> The Fair Deal seems to punish those who lived a frugal life and saved their money while rewarding those that saved feck all, hid assets or have a very valuable home and not much else.


 
I have no problem paying our contribution under Fair Deal, and overall consider it to be a good scheme.


I have two close relatives in private nursing homes, under the Fair Deal scheme. Both worked all their lives, have homes and savings. It costs in excess of €70K a year each for their care, most of which is paid by Fair Deal. Without Fair Deal these costs would be beyond the means of most, even those considered well off.

It is comforting to know my relatives care is organised indefinitely. 

No scheme is perfect, there will always be some who contribute nothing, and get the benefit of everything, I don’t see this as a valid reason to try to avoid paying, when one has the means to do so.

Those with valuable homes and not much else are not rewarded, if they do not have the funds to pay this part of their contribution, it can be deferred, and a charge registered against the house, so whenever it is sold, this amount will be payable then.


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## Black Sheep (26 Mar 2013)

The persons means are assessed at the start of the Fair Deal process and can be reviewed at any time, and I believe should be reviewed regularly if the person is in nursing home long term. The more likely reasons for the review is that the person's savings are decreasing with every payment to that nursing home.

By the end of year 2 or 3 savings have decreased dramatically and therefore HSE payment would need to be increased.

I would be wary about receiving a gift from a person in that situation as a gift is yours to spend as you choose. If having spent the gift, and the HSE runs out of money (as is quite likely) how do you feel or where do you stand.

If you keep the money with the intention of subsidizing the relative if needed, then you are receiving a loan not a gift


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## The Ghoul (27 Mar 2013)

Black Sheep said:


> If you keep the money with the intention of subsidizing the relative if needed, then you are receiving a loan not a gift


That is the intention, yes.

If it is a loan then presumably there is no CAT for either the borrower (me) or the lender (my relative) if I need to repay it. But what happens if the lender dies with the loan partially or fully unpaid, do I have to pay the money back to their estate. I would then inherit everything anyway and presumably pay CAT then.

 Edit: found this. Looks like I have to pay interest on the loan or else it constitutes a gift
http://www.revenue.ie/en/tax/cat/guide/free-property-loans.html


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## Black Sheep (27 Mar 2013)

Complicated no matter which way you go.

As I've already said I prefer inheritances to gifts from older folks in nursing homes. That's just a personal view. Was offered a gift by a close relative and declined due to possible healthcare costs (which were never required) and received an inheritance a couple of years later


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