Inheritance tax and Fair Deal scheme

[kerrymol]

My father has substantial savings, a good pension and the family home is worth approx €350k.

He has a recent diagnosis of dementia although very much in the early stages. We hope to keep him at home for as long as is feasible. Fair deal doesn’t seem to be the best option for him given his assets.

I’m just wondering how we (myself and my sister) can do now to in terms of acquiring some of his assets without being hit by the taxman. I am married with two children and my sister has a long term partner (unmarried). It was mentioned that my dad could potentially pay for a car upgrade for me given that I do all the driving for him. Dad is alert and engaged but also very concerned regarding the assets my mother and himself gathered over the years. They lived frugally and saved for their old age (mom passed away suddenly 6 years ago). Dad would have more than enough to pay privately for nursing home care if circumstances were to change.

 

[arbitron]

"acquiring some of his assets without being hit by the taxman" is a very unfortunate phrase.

Your father can give each of you a gift of up to €335,000 free of tax, either now or in his will.

Fair Deal assessments take into account any gifts transferred in the 5 years prior to application, so bear that in mind as you do not want to put him in a precarious financial position.

He should really prioritise his own needs and likely upcoming care costs.

 

[Clamball]

It is great that he has saved for his old age, now is the time for him to spend it. He can use his savings and pension to pay for his care. I am sure you would much prefer your Dad spends the money on himself than let the taxman pick over it when he dies. I hope you and your sister will encourage him to get the best care he needs now.

 

[Dr Strangelove]

substantial savings,

This could mean anything.

You would get better advice if you gave the amount, even roughly.

 

[kerrymol]

"acquiring some of his assets without being hit by the taxman" is a very unfortunate phrase.

Your father can give each of you a gift of up to €335,000 free of tax, either now or in his will.

Fair Deal assessments take into account any gifts transferred in the 5 years prior to application, so bear that in mind as you do not want to put him in a precarious financial position.

He should really prioritise his own needs and likely upcoming care costs.

This is my first time posting here.

"acquiring some of his assets without being hit by the taxman" is a very unfortunate phrase.

Your father can give each of you a gift of up to €335,000 free of tax, either now or in his will.

Fair Deal assessments take into account any gifts transferred in the 5 years prior to application, so bear that in mind as you do not want to put him in a precarious financial position.

He should really prioritise his own needs and likely upcoming care costs.

that turn of phrase was unfortunate but I’m sure you can understand my intention. We’ve calculated homecare and nursing home potential costs for 10 years and are confident he’ll be well covered. I’ve taken some carers leave myself for a few months until he’s set up at home.

 

[llgon]

You have mentioned Fair Deal in the title of your thread although you appear to have ruled it out, so it should not be relevant?

You're more likely to get a better response if you edit the title to summarise your query.

 

[Premos]

If you think he would be better to pay for his own care, he will need substantial amount of cash. His care needs also depends on his age. 10 years is a lot if he is 80 but not if he is 70.
If he is concerned about his assets I would suggest he gets independent advise.
You mentioned you had to take carer leave. How early is the diagnosis? If he has dementia, it might be too late for him to organise his financial situation. Is an EPA in place?

 

[kerrymol]

This could mean anything.

You would get better advice if you gave the amount, even roughly.

This could mean anything.

You would get better advice if you gave the amount, even roughly.

It is great that he has saved for his old age, now is the time for him to spend it. He can use his savings and pension to pay for his care. I am sure you would much prefer your Dad spends the money on himself than let the taxman pick over it when he dies. I hope you and your sister will encourage him to get the best care he needs now.

securing the best care possible is option number one and absolutely our priority. I have also taken a few months off work in the form of carers leave. Completely committed to dad’s best interests but also aware of the looming reality of inheritance tax which is causing him a lot of worry.

This could mean anything.

You would get better advice if you gave the amount, even roughly.

approx €1m

You have mentioned Fair Deal in the title of your thread although you appear to have ruled it out, so it should not be relevant?

You're more likely to get a better response if you edit the title to summarise your query.

youre right. I’ll amend this. Thanks so much. First time posting here.

 

[Dr Strangelove]

aware of the looming reality of inheritance tax which is causing him a lot of worry.

My own father tells me any inheritance tax bill is my worry and not his. He’s completely right! Assure your own father that he has more than enough for whatever care he needs and that inheritance tax shouldn’t concern him.

If nursing care seems imminent then there is probably no point in him gifting anyone large sums as it will count against Fair Deal. I don’t know the intricacies of the Fair Deal but I’ve seen threads where people say with that level of cash wealth it’s not worth availing of. Look up AAM threads on this.

In the near term he can give €3k per year tax free under the small gifts exemption each to children, their spouses, and grandchildren. Make sure it is documented so that it doesn’t count against lifetime CAT allowances.

approx €1m

It’s a huge amount to have in cash. Make sure he has it spread between multiple institutions to avail of the €100k deposit guarantee scheme. Try and make sure he is earning the best interest rate possible too. You might want to avail of some online banks that offer good rates, but balance all this advice against ease of sorting out his estate in due course.

 

[Clamball]

I feel sorry for your Dad worrying about inheritance tax when he does not need to at all. He will never pay the tax himself. But I do know that people can get fixated on a topic and fret about it. Perhaps the €3K per year gift to each person might reassure him that he is doing the right thing?

He can gift his children €335K any time he likes without triggering gift tax but that is almost €700 K between 2 of you and can he afford that?

Say he needs nursing home care for 10 years - @€2000 per week increasing @10% per annum, that is €1.66 million, so probably affordable with his assets, cash + pension + house. Working back from that it is going to be less as he probably will be able to stsy at home and could get some home care hours etc.for some time.

If he goes down the fair deal route, and takes that up in tie 5 years HSE are going to work on the proposition that he still has that €335Kx2 when calculating his assets.

It is admirable that you have taken carers leave to look after him now. In terms of the car, is it that your car is unsuitable in size or design or that he has no car of his own? Perhaps you being insured on his car would work. Another alternative is maybe use taxis as you could sit beside him and reassure him.

Best of luck

 

[Slim]

It's a very distressing and worrying time for your dad and you all. If he goes into nursing care and lives for 10 years or so, his savings will be depleted, but his pension will add somewhat to his savings. If he transferred his home to you and your siblings, with a right of residence for his lifetime or until he goes into nursing home care, that would absorb approx €115 of the lifetime CAT allowance. He could gift €220k to each of you now and you gamble that he will not need nursing home care for at least 5 years. This would minimise the assessment under Fair Deal which he may ultimately need anyway. Alternatively, if he gifts each of you €335k now, the home will only be assessed for 3 years. This is terribly simplistic and ignores emotions and family dynamics but I feel he will need Fair Deal eventually so you may as well minimise the impact.