Money gifts before death

A foolish friend who is 84 has given her sister in law (also 84) and her husband a cheque for £127K to help them buy a bungalow suitable for there aged needs. They actually phoned and asked her for the money although they have never been close. I think I am correct when pointing out to her that if she dies in the next seven years that the money will still be part of her estate and subject to inheritance tax. She asked how will it be known that she had given it to them ? My other though was that as her relatives who get a lot of day to day help from social services that one or both of them will end up in a care home and her hard earned cash will end up in council hands if the property is sold to pay for their care. Derek
Reply to
Derek F
Yep. And if she needs care and would otherwise fall under the asset threshold for having it funded, it will be counted for that - "deprivation of assets".
If there is the slightest suspicion, digging into her finances will be done.
That, too, is an issue. It'll end up with the care home provider instead of council funds, though, unless it's one of the very small number of council-run homes.
Reply to
Adrian
She won't run out of money unless she keeps on giving it away.
Presumably they are suspicious of anyone who leaves a considerable sum.
I'm thinking that as they get other help from social services that they would probably arrange for them to be placed in a care home. The sister in law evidently already has dementia and is looked after by her husband. Derek
Reply to
Derek F
They will have to go through he probate process and not declaring stuff is an offence. Possibly no one might find out, but possibly they will.
Reply to
cryptogram
Because her executors will have to fill and sign a form listing all such gifts (large and small). They are not going to risk a prosecution for fraud in order to save some inheritance tax.
Robert
Reply to
RobertL
RobertL writes:
How, in general, do the executors come to know of such gifts? Does everyone (living) have to record such gifts somewhere that the executors can access and know about, just in case they should die within 7 years of the gift being made? For example, if someone were to withdraw a few hundred pounds, in cash, from the bank and give it to a friend who needed it for some reason, how would the executors know of this gift? They would be able see the cash withdraw in the bank statements but that would give no indication as to the disposition of that sum - whether it was a gift to someone or used to pay a debt or to make a purchase etc.
Reply to
Graham Murray
In fact I do just that. I make a note of them and file it with a copy eac h year's tax return. But probably I'm a bit odd like that. the reason I d o it is that the only time I have been an executor I found that the decease d had annotated his bank statements so the task was made easy.
You are supposed to keep financial records for 7 years, so I guess there is actually an obligation to record gifts.
Robert
Reply to
RobertL
If you give money away from your surplus income (as opposed to capital) so that it should be exempt from IHT even if you don't live for 7 years, is there a recommended way of recording the fact?
Reply to
Roger Mills
each year's tax return. But probably I'm a bit odd like that. the reason I do it is that the only time I have been an executor I found that the dec eased had annotated his bank statements so the task was made easy.
e is actually an obligation to record gifts.

I don't think so, but it is worth getting hold of the current probate forms to see what information your executors would have to supply.
I think they now require some kind of brief justification that capital is n ot being used to fund the payments.
My father made monthly payments to me for several years. When he died and I filled out the probate forms it all went smoothly and the amounts were no t counted as taxable gifts.
My
Reply to
RobertL
On a similar note what counts as gifts? Just financial?... Or as occurred to be when battling through my proposed g ifts list for 2013 does this cover a gift of built in wardrobes for my lady friend, a trampoline for my granddaughter, refurbishment of my daughters r ear garden, buying a new lawnmower for my lady friends birthday, the set of pearls I bought for her as a Xmas pressies. Where does it stop?...or is ev erything potentially a PET until 7 years has elapsed? I already use my exemptions...the £3k per year.... The £250 small gifts exemption.
Reply to
Clive.lister
gifts list for 2013 does this cover a gift of built in wardrobes for my la dy friend, a trampoline for my granddaughter, refurbishment of my daughters rear garden, buying a new lawnmower for my lady friends birthday, the set of pearls I bought for her as a Xmas pressies. Where does it stop?...or is everything potentially a PET until 7 years has elapsed?
I believe the answer is "yes".
Robert
Reply to
RobertL

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