Making gifts for tax planning purposes on behalf of someone lacking capacity
The sale of property, usually a home that will no longer be needed if a parent is moving permanently to a care home, is an obvious option as it creates available capital to help pay for the cost of care fees. The parent’s property could be placed on the market and the sale proceeds used to fund their care if they are moving to a care home but only if no-one else is living in the property. This last qualification can be problematic where a son or daughter has lived in the family home all their life, something that may be likely in the event that they have remained in order to look after their parent.
An individual may be eligible for the local authority to pay towards the cost of their care if they have more than £23,250 in savings. Their ability to pay for care will be calculated through a means test and, if moving into a care home permanently, the value of their current home will not be included if a spouse/partner still lives there (or, in certain circumstances, a relative). Although it may seem a good idea to transfer property out of the parent’s name to avoid it being assessed as part of the means test, this should be approached with caution. If the property would have been included in the assessment and the local authority believe that it was transferred to avoid care costs, it can carry out the assessment as if the property is still owned by the parent. The home will be included in the means test at its present market value less any mortgage that may be in place and any potential expenses involved in selling it.
If a daughter or son has lived with the parent requiring care their whole life, they may have occupational rights in relation to that family home and this could mean the value of the family home cannot be taken into consideration on any financial assessment. The question of whether a person has an occupational right over a property is one of fact and will be assessed per individual circumstance. ‘Occupation’ is not a legal term and therefore does not have a single legal definition and so is a tricky concept.
If the mother in this situation was able to sell the house then the proceeds would belong to her as the property owner which would then be included in the assessment as part of the means test to establish whether she is able to pay for her own care. It is likely that sale proceeds from a property will mean that she would then meet the threshold for being able to afford to pay for her own care – the savings threshold for local authority funding in England is currently £23,250.
The care funding system is incredibly complex and every case is unique, so you should seek advice before taking action in relation to paying for care. Age UK provides comprehensive guidance on paying for residential care but as the law surrounding care provision is very complicated, we would suggest seeking advice from a solicitor before proceeding.
Anita Gill is a partner in our Private Client team specialising in Court of Protection work. Anita’s main role is acting as a professional deputy for individuals who have lost the capacity to make their own decisions and are no longer able to manage their property and financial affairs.
A Lasting Power of Attorney (“LPA”) is a legal document which allows you to choose who should help you make decisions or make decisions on your behalf when you lose mental capacity and are no longer able to do so yourself. The person making the LPA is called the ‘donor’ and the person or persons given authority under the LPA are called ‘attorneys’. There are two types of LPA: one for ‘Financial Decisions’, for example paying bills or dealing with properties; and one for ‘Health and Care Decisions’ which can cover decisions from what type of care you receive to whether life sustaining treatment is given or not.
The Government has for some time promised to introduce a register requiring overseas entities holding UK property to identify its beneficial owners, in its effort to increase transparency in UK property ownership and reduce the attraction of the UK’s property market to money launderers. Indeed, we last blogged about the potential overseas entities register in May 2019. With UK-based entities subject to strict information-sharing requirements since 2016 (in the form of the register of People with Significant Control or “PSC Register”), many have been calling for an equivalent overseas entities register to be implemented to provide a way of tracking overseas owners who ultimately own and control UK land.
Laura Harper was delighted to be invited to talk to the editor of ‘Wealthbriefing’ recently about the important topic of philanthropic giving by HNW individuals and families.
Apple officially released its ‘Digital Legacy’ feature on 13 December 2021. This permits individuals who have been nominated by the deceased to access the deceased’s accounts and data after their death. Diva Shah examines the impact of this new feature and its implications for Private Client practitioners in matters of estate planning where digital assets are involved.
The UK government introduced new legislation that will require those working in care homes to be double vaccinated against coronavirus. This has been implemented through the Health and Social Care Act 2008 (Regulated Activities) (Amendment) that came into effect on the 11th November 2021. This regulation is applied to England only.
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As non-UK tax residents, the couple will be subject to special rules for calculating the capital gains tax (“CGT”) due in relation to either the sale or transfer of their UK property.
Our well regarded French contact* has warned us that a new law just passed in France is going to cause problems for Anglo / French succession planning. Under the laws of England and Wales, all individuals have testamentary freedom and can leave their estate to whomever they choose under the terms of their will.
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With the price of crypto assets generally making a good recovery from the Covid-19 related decline of 2019 contrasted with the very recent volatility following issues with the adoption of the cryptocurrency as legal tender in El Salvador, investors in cryptocurrencies might be considering realising some of their gains to try to help minimise any further instability.
In recent years there have been calls for a change in the law to protect vulnerable adults from falling victim to what has become known as “predatory marriage”. This is due to a rise in cases where fraudsters have married vulnerable and often elderly individuals, without the knowledge of their loved ones.
The Office of the Public Guardian (OPG) and the Ministry of Justice are working together to modernise the process of making and registering Lasting Powers of Attorney (LPAs). The consultation is open to the public and will remain open until 13 October 2021.
Good news – The “secret” specialist HMRC unit set up in 2019 to examine the tax avoidance risks has been wound up after finding no evidence of correlation between the use of FICs and non-compliant behaviour.
Deputies are typically appointed because individuals cannot make decisions for themselves due to illness, like Alzheimers or dementia, old age or perhaps as a result of a catastrophic personal injury or medical negligence.
There are several reasons why someone may need the assistance of a financial deputy, stemming from incapacity due to an accident or a consequence of old age. There is however a darker side to this type of work that Court of Protection lawyers are seeing more and more of. This relates to those who have suffered some form of financial abuse and/or undue influence.
After a spinal injury the long-term impact on your life and that of your families can be significant. You may need a care package, a new home or adaptations to their existing accommodation, therapies and specialised equipment.
The pandemic has changed the world – there is no doubt we are all “online” far more now than before. Social media now extends into every aspect of our lives, from those notorious repetitive baby pictures to those ‘should never have been posted university photos‘. We collect and share moments of our lives in the digital world.
In the latest edition of the Financial Times Money Q&A, Jemma Garside, senior associate in our private client team answers a question: "Should I set up a joint lasting power of attorney for my mother?"
Subject to any restrictions or conditions in the Lasting Power of Attorney (“LPA”), a property and affairs attorney can make gifts on the donor’s behalf to the donor’s friends, family members or acquaintances on customary occasions.
Going through a divorce process is stressful. There are lots of things to think about and one of these is likely to be what you should do to protect your hard-earned money.
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