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.
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.