Spend Wealth or Gift Your Wealth in Your 60s and 70s

Published / Last Updated on 02/10/2020

The reality of both care fees means testing and inheritance taxes is that if you build up wealth there is no guarantee that your loved ones will inherit on your death.

  • If you need care in later life, the means test will likely mean that most people will need to fund part or all of their care.
  • If you leave wealth above a certain level on death, inheritance taxes will need to be paid from your estate.

We are not saying the you should be frivolous and waste money.  We believe you should plan early for potential care fees in your latter years and plan for inheritance taxes.

There is a catch here.  If you want to leave your wealth to your loved ones, your wealth may get ‘trapped’ in the care fees mesh and you cannot simply spend it or gift when you are in care to reduce any inheritance tax liability.

If you plan to make gifts to loved ones on your death, you should plan early in your 60s and 70s and consider making those gifts before elderly aches, pains and illnesses start.

If you leave it too late and then develop a condition that may lead to a need for care in the future you cannot simply gift your wealth away as it is considered a ‘deprivation of assets’ i.e. you may be disposing of wealth to avoid future care fees means testing.  The trap is that once you are in this position, it is then difficult to plan and gift assets away or set up trusts for inheritance tax mitigation. 

  • We suggest you plan early for care fees to demonstrate and deliver proof that you have a plan for this.
  • We suggest you make gifts that you plan to make on death early before developing any illnesses or conditions.  Ideally, make those gifts in your 60s and 70s.

By doing this, you ensure that your loved ones will receive what you want them to receive, you potentially reduce inheritances taxes as well as already having a plan for care fees.

Spend your wealth or gift your wealth in your 60s and 70s.

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