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.
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.
A donor must have the mental capacity to make a Lasting Power of Attorney (“LPA”) for property and affairs and health and care. The completed LPA is then sent to the Office of the Public Guardian (the “OPG”) for registration. Each page of the registered LPA will be stamped with ‘VALIDATED-OPG’.
As a business owner/shareholder, what would happen to your business if you were unable to make decisions – would someone be able to authorise payments or enter into contracts and keep the business running?
Lasting Powers of Attorney (LPAs) are vitally important documents. Our previous blogs have touched upon what LPAs are and top tips for anyone planning on putting an LPA in place. Most individuals should at least put in place a financial LPA to cover their home and personal finances. It is however a good idea in some cases to have a second financial LPA.
The last 12 months have put an awful lot of pressure on the family unit and sadly this has led to a spike in separation and divorce amongst married couples. With the end of the tax year fast approaching (last day Monday 5th April – Easter Monday) it is timely to consider the tax consequences of separations.
Whilst managing the property and affairs of another person a Deputy appointed by the Court of Protection may come across issues that require them to pay for legal advice and assistance on their behalf. Examples could include purchasing a property, challenging a care plan or obtaining advice about a dispute.
Partner and head of our Private Client team, James Ward, writes about the importance of entrepreneur's putting in place a succession plan to safe guard their reputation.
LPAs are important, and are steadily growing in popularity as individuals realise how necessary they are to support friends and family in the event that they lose mental capacity. Our previous blog gave an overview of how LPAs work and the requirements for making them. This time, we focus on our ten top tips for LPAs.
A Power of Attorney is a very important estate planning tool, especially when an individual loses capacity. Whilst the term ‘Power of Attorney’ seems to be thrown around a lot, it is often misunderstood or not used correctly. In fact there are several different kinds of powers of attorney that can be used for different purposes.
As we find ourselves in another national lockdown, the New Year presents an opportunity for individuals to review their assets and conduct some succession planning.
Phoebe Alexander and JIm Sawer blog about lasting powers of attorney and engaging Discretionary Investment.
Big news was announced by the Government at the end of last month: legislation will be introduced to allow remote electronic witnessing of wills – including for some that have already been made – in a significant amendment to the long-standing requirements. However, it will only be temporary.
Chancellor Rishi Sunak has asked the Office of Tax Simplification to review Capital Gains Tax (“CGT”). CGT is charged on the profit/increase in value on sale or gift of assets. The rates are 18%-28% on disposals of residential property and 10%-20% on other assets. There’s an annual exemption of £12,300 per taxpayer. Disposal of your main residence is tax free and “Entrepreneurs Relief” may see the first £1million of the gain on the sale of a business charged to CGT at the lower rate of 10%.
On the death of a person known to have made a Will, it’s pretty rare that the Will can’t be found...
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