Island Life Magazine Ltd October/November 2013 | Page 144

Legal Issues with Roach Pittis Solicitors

Care, Costs and
Charity
By Ian Bradshaw
I received this recent enquiry: “My two
grandchildren are going to university
and I am in a position where I would
like to help them with the costs of
tuition fees. However, I am slightly
concerned that if I give them some
money the local authority may believe
I am seeking to avoid paying possible
care fees in the future.”
Provided you can afford to do so,
there is no limit on the amount you
can choose to gift to anyone. However,
there are some aspects that you should
be mindful of. Firstly, any gifts you
make may be subject to inheritance tax
if you die within seven years of making
the gift. Individuals currently have a
nil-band exemption of £325,000 to
inheritance tax subject to gifts they
make in the immediate seven years
before they die.
So if you gave your grandchildren
£25,000 then died within seven years
of doing so your exemption would be
reduced by the value of the gift, in this
case to £300,000 (although £3,000 per
annum is an allowed gift). Secondly,
if a local authority believes you are
purposely gifting assets to avoid paying
care fees then you can be investigated
as this is not permitted. Currently
local authorities can make you pay for
your own care in the circumstance that
gifts were made with the intention of
avoiding care fees.
There is no time limit on how far
back they can look if assets have
been purposely gifted to avoid such
payments. Where care or nursing
home fees are only a future possibility,
the longer the period between a gift
and the time you go into care make
any challenge by a local authority less
likely to succeed. It all depends on
your intent.
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The obvious warning with this is
that you should only ever gift monies
or other assets that do not affect
your future needs and monetary
requirements. As much as it is nice to
help a loved one on their way in life
the first priority has to be looking after
yourself. Circumstances, the timing,
the value of the gift against the value
of your savings and your intentions
will all contribute in determining
whether a gift is successful with these
fees in mind. Therefore, by all means