paying family to care

For information and discussion about benefits
Hi,

I have LPA both on Welfare and Financial for my 93 year old mother.
12 months ago my sister started taking care of her in her own home and we sold mum’s house.
I gave my sister £3,000 cash of my own money and since then have given her £300/week, out of mum's account from the sale.
Now 12 months have passed, I want to gift my sister another £3,000 out of mums £30,000 bank account (her total assets) and increase her weekly pay to £450
Mum’s pension/income is £300
Can I do the above, and if I do this over a long period the money will run out, if this is the case and my sister then is unable to look after mum how will her care be paid for?
Welcome to the forum. It's really great to hear of someone who understands that family should be paid for the care they provide, because so often, relatives are expected to do it for nothing. I would recommend that you give the Carers UK helpline a ring or email to discuss the full circumstances, because it may be a bit complicated, so here are a few comments which may be useful.
When mum only has about £23,000 left in savings, she may be eligible for help from Social Services, subject to a Needs Assessment. To qualify, there will first need to be a Financial Assessment, and part of this will involve looking at mum's assets and how they have been spent. There is a thing called "Deprivation of Assets". To use a silly example, if you spent all mum's money on a Porsche, then they would say that it was done deliberately, and therefore would count that money as an asset although it had been spent.
As you will get down to £23,000 within the next year or so, I'd suggest starting the ball rolling now, ask for the Needs Assessment and also a Carers Assessment for your sister. Then you can talk to the financial assessor about what you can and cannot do.
Is mum receiving Attendance Allowance? Is your sister claiming Carers Allowance? If mum is mentally infirm, has anyone told you she should not have been paying Council Tax? All these things will help make mum's money go further.
Also make sure that your sister has all the aids she needs to make nursing mum easier. Aids are free of charge via Social Services or Health.
I would also ask you to ensure that your sister has some regular weekly "time off" from caring, and also arrangements are made for her to have a holiday once or twice a year.
Should the payment to your sister be regarded as employment for work performed? In which case you need to consider whether tax and National Insurance should be paid on it
Colin issues a timely warning! That said, check out the current Personal Allowance (I think it stands this tax year at about £10k or thereabouts) so if the total your sister receives is below that, she won't pay income tax. As for NI (payable I believe on ALL earnings), if she is in receipt of her state pension already I believe she won't have to pay NI any longer???? Please check this though!

Also, if your mum's total assets are now only £30k, and decreasing steadily at a rate, it might be time to phone the council and alert them that she will be reaching the £23,500 threshold 'this year' or whenever it's likely .I was told by the council that they need a few months 'notice' so as to get the changeover to LA-funded care in place in time. I'm facing this with my MIL in a couple of years when she will have spend the entire value of her sold flat to pay for her residential care for dementia. Grim.
Is the LPA through the Court of Protection?

Personally, as a retired civil servant in both Local and Central government, I have some reservations about your arrangements.

You really need a contract of employment for your sister and some sort of time sheets to prove that she is working for the money.

Otherwise, questions could be asked later, when they make financial assessments of your mothers assets, I think
This is the sort of issue that the CUK helpline will be able to talk to you about. If mum was unable to remain in her own home due to high care needs, then without your sister, the only alternative would be residential care. In my area that's about £700 for a care home, £1,000 a week for a nursing home bed. Under these circumstances, your sister's care is incredibly good value.
If that is the total amount you are paying your sister, then a lot of that would not be the cost of care, but "board and lodging".
Des, please post any info you get. This topic is very relevent to many of us. The lines between inheritance gifts, income gifts, employment and deprivation of asserts are so blurred.

Kr MrsA
Wow, that's a great response thankyou all!
I have been intouch with thlocal council and been totaly honest with the whole set up.
They asked me to put it all in writing which I have done, they told me to send them regular updates if any surcumctances change, but bascally gave me the ok to continue.

good point about Tax and NI, I'm going to pass this advice onto my sister.

Regards, Des
Glad we could help. I can't remember full details, butbbelieve there are special rules about income from "lodgers".HMRC probably have details on their website. This would reduce her tax liability I think.
Definitely check out the tax implications of having a lodger - because, as BB says, I think you can get a certain amount of 'rent' off them and not pay any tax on it.

And your caree should definitely pay 'their share' of council tax, utility bills, food bills etc etc etc. And if they have dementia, they shouldn't pay council tax (or rather their share of it)