I have an elderly relative who has no children, is a widow, and lives alone. She has no desire to live in a nursing home. We are fast approaching the time when she will require some degree of nursing care to remain in her home but she doesn’t have the means to pay for it.
My question is if I pay for nursing support and claim 40 per cent tax relief could I claim the balance from her estate in due course?
Mr P.M.
The easy answer is “No” but it might not be as straightforward as that. As it happens, you are one of two readers asking almost identical questions in the wake of my recent piece on the tax relief available for providing essential care for elderly family or relatives so it is clearly an issue.
It is one of life’s cruel ironies that the cost of care we need in old age comes at a time when most people cannot afford it. But, as the HSE system of care hour provision is so oversubscribed – or should that be under-resourced – it falls to the elderly people themselves or their families to try to fund care privately.
The even less palatable alternatives are hospital care or long-term nursing home care, ideally availing of the Fair Deal subsidy.
Even leaving aside people’s natural preference to remain in their own homes for as long as possible, it seems very shortsighted of Government to ignore the substantial savings that should be available to the exchequer by adequately funding homecare so that the State can avoid the more expensive options of forcing older people into nursing home care or a hospital bed where many are simply blocking beds as they have no medical needs requiring acute hospital care.
This is the exact position in which your elderly relative finds herself. She has no interest in considering the nursing home option but does not have the funds to pay for private nursing and/or other care at home.
So what should she, or you, do?
The first thing is to get yourselves on the radar for HSE care hours. Your elderly relative can do this themselves without going through their GP or other medical professional. They will need to fill out a Home Support Service Application Form (Form HSS1).
If they are unable to do that, it can be done for them by someone helping with such decisions either informally or someone more formally recognised via the Decision Support Service.
The HSE will conduct a care assessment when they get the application – normally carried out by a HSE nurse – and come back with a decision on whether the application is approved and, if so, how many hours of care it can provide – either directly or through on the commercial care agencies with which they work.
After that, any additional care will require private funding and whoever is footing the bill can claim tax relief on the money spent.
This is where your plan gets complicated.
Clearly, you cannot make a claim against an estate simply because you took upon yourself an expense.
When this relative dies, any debts they have outstanding will be collected and paid from her assets with the balance then distributed in accordance with the intentions expressed in her will. There is no provision for someone being recompensed ahead of stated beneficiaries simply by virtue of them having spent money on the person’s behalf while they were alive.
However, things might be different if there was a formal contract between you and this relative under which you agree to fund the care with the cost being accepted as a debt upon the estate.
Ideally this would be drawn up by a solicitor just to make sure everything is sensible and above board – and that your relative knew what they were agreeing to when they signed such a contract. The potential for such arrangements to cause intra-family strife down the line is significant and although we all think it will never happen to us, experience indicates that we are often wrong in that confidence.
But what about Revenue and whom should be entitled to the relief available as your elderly relative is ultimately meeting the cost of this care but only in retrospect – and she clearly would not have sufficient income to maximise any tax relief which is granted at a person’s higher, or marginal income tax rate.
The answer was less than helpful though that may be because this is not the sort of situation Revenue has come across too often up to now.
Revenue did confirm the obvious – that the person paying the cost of care can claim the relief.
However, in relation to the tax implications for you of subsequently claiming that back from her estate, all it could say was: “Should the individual in question [that is you in this case] receive money or assets from the elderly person at a later point, whether that be in the lifetime of that elderly person or upon their death, there may be corresponding tax implications but these would be dependent on the facts, circumstances and particulars of any agreement in place between the two parties.”
I had asked about the position both where the full cost to you was claimed back from the estate and, separately, whether you claimed simply the net cost after tax relief.
There was no clarity on whether they were talking about clawing back relief already granted or whether they were referring to the potential for you to be subject to liability for capital acquisitions tax (inheritance or gift tax) on anything you received from her estate.
Clearly that would depend in large part on whether the repayment was made under the terms of her will or whether it was as a debt on her estate to be addressed during probate and before the terms of the will were honoured.
Anyway, the excess of caution in that Revenue response tells me you need to think very carefully about any plan to fund your relative’s care on the basis that you could claim the cost back at a later stage. I suspect you might find yourself having to repay any tax relief on the cost of that care and potentially subject to investigation on why it was claimed in the first place.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to dominic.coyle@irishtimes.com with a contact phone number. This column is a reader service and is not intended to replace professional advice
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