The Law Society has sent me an email saying:
Increasing care home fees could mean elderly people have nothing to leave in their wills.
This warning follows a report that more than 20,000 pensioners had to sell their homes last year to pay for residential care home fees- an increase of 17 percent in the past five years.
I remain utterly baffled by the inherent logic in such claims. A pensioner who can no longer live at home has to sell their home to pay for their care?
Sorry — but I really don’t get the problem.
Sure I do if that means that a spouse is then homeless — clearly provision has to be made in that case.
And the right to provide a home for a dependent carer who has lived in the home has to made as well.
Thereafter, why the heck shouldn’t a person be obliged to pay for what they need? No one has the right to pass on an inheritance. And I really can’t see why the state should be subsiding those with a capacity to pay for their own board and lodging — which is what much of the cost a care homes is, after all. Medical care is provided by the state through the NHS.
So, I just don’t get the Law Society concern — unless, of course, they’re seeking to preserve the capital of their wealthier clients who want a state subsidy to ensure they can pass their wealth to their offspring. In which case, that’s the worst use of public funding I can think of.
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Richard, I don’t really see where the Law Society are coming from here.
However, you say “No one has the right to pass on an inheritance.” Why shouldn’t we have a right to pass on an inheritance?
@Greg
It’s not a right
it’s a privilege
It’s a privilege upheld in law
But there is not a right to have assets to pass on
Then what is the point in TRYING to obtain anything, if we are not free to dispose of it as we see fit?
It strikes me as very wrong that people who cannot seem to make the effort to properly provide for the care of their elderly relatives should look forward to a windfall after their passing, if it was the tax payer who picked up the bill for their care. I’d even go so far as to suggest they didn’t deserve anything if they had ignored their family members at their time of need and delegated responsibility to a care home and social services. I feel differently about those who put the vulnerable members of their own family ahead of hedonistic self indulgence, careers and/or an selfish life.
Richard, I agree with you on this.
It does seem quite wrong to have your living subsidised by the state whilst sitting on a house often (if we are talking about the elderly) with little or no mortgage and a value that has undoubtedly grown over 30-40+ years of ownership.
Sell the house and use the equity first before tapping the state for help.
@David
You can dispose of it as you see fit
Buying care in a care home is disposing of it as you see fit
When two pensioners are living in the same “residential care home” receiving the same standard of care both should be required to exhaust their capital assets before the state commences to pay for their “care”.
One pensioner may have few assets and a modest house, whilst the other has £1 million, but both should be treated equally (providing that a spouse is not made homeless — and provision is made to house independent carer) and it is reasonable for both pensioner to be required to exhaust their assets before the state is required to pay for their care.
An “inheritance” something material acquired or derived from the past — that anyone else should have a “right” to this in preference to the material owner’s obligation to meet their liabilities is unreasonable.
It is possible to view inheritance, or misplaced entitlement, as being a barrier to many of the progressive measures Richard promotes via his blog. Multi generational, dynastically ambitious, wealth is destructive and consumes a great deal of economic energy. Removing inheritance would direct these energies towards the general good, as a means of safeguarding the future, rather than the building of financial fortresses.
At the very least there should be no distinction between inheritance and income.
@MacB
For the record, I think capital gains tax should be charged on death and I think that gifts should be taxed on the recipient on a lifetime basis to encourage diversity by donors and the dispersal of wealth. above a lifetime allowance then I agree, the receipt of gifts should be considered income, and be taxed at the recipients highest marginal rate.
Yes I know this will mean some businesses are broken up on the death of the original owner. Candidly, this is usually the best – especially if an exemption was given for the gift of shares into an employee trust in lieu of the tax
Annual land value tax would stop an awful lot of the accumulation of wealth through no effort – which is landed property ownership.
Taxing gift recipients is ridiculous. Once I have earned income and paid tax on it, I should be free to dispose of it as I wish, and to whomever I wish, without hindrance from the state. Anything less is totalitarian.
That said, I agree with you regarding selling a home to pay for residential care. Passing on an inheritance is something you should have a right to do if you have the means. But it should not be an automatic entitlement just because you happen to own a house which has appreciated over the years.
In the politest terms 😉
If you have two families, both of whom had parents who worked full time:
* one family saves and scrapes through with the monthly mortgage for the full term, to have some property and the back of them.
* the other family decides to spend its earnings on other pursuits, essentially having no property at the back of them.
Now, suppose for one moment that both families have the same rights and levels of access to ‘residential care for the elderly’. Do you think it is fair that the family which has taken the careful/provident route is forced to sell their asset, when the second family gets the same treatment for free when they have already spent their money in other ways?
REAL LIFE EXAMPLE
=================
I live in a block of terraced houses. I am ordinary working class bloke with standard family income. I forsake all pleasures such as eating out, cinema, smoking, drinking etc to ensure that I can pay my mortgage and hopefully leave something for my kids, which will give them a better start in life than I had (my parents essentially rented all their lives).
One of my neighbours is another ordinary working class bloke with a wife and child, but spends his money on the things I do not. He rents, which is somewhat lower than my mortgage (if I choose to believe what he tells me).
Following your argument, if both of us had to have residential care if we are lucky enough to reach old age, I will be forced to sell the property I have worked hard to attain and keep, to pay for my care. However, my neighbour will receive the same level of care, having already spent his in other ways.
I believe this stance to be wholly unfair. If society at large considers it fair, then I may as well give up trying to do my best and the right thing at once, and live like there’s no tomorrow.
I believe your argument / point of view punishes those who try and preserve what little they have after all taxes and duties have been taken into account.
@Richard Murphy
reading this blog is like stepping back into the 1960s when pro-communist attitudes prevailed.
An increasingly unacceptable tax footprint to the upper middle class will have a number of effects,
– Globalisation which has driven the economic growth over the years will reverse as companies are created in low-tax areas, one only needs to see the companies re-domiciling overseas from the UK already
– jobs will be increasingly lost as SME companies are broken up etc on taxation on recipients
– investment will be made into areas where there are low-tax treatments
As the working middle class are increasingly geographically mobile, then higher tax will directly correlate to higher outward emigration.
Our company was set up in a low tax area and the IP is held in tax havens because of the risk of increasing tax – the alternative choice was to set up outside Europe entirely in either the US in a tax friendly state or in the Far East which is significantly more tax friendly
And thus the responsible citizen is penalised – better he spend his money on wine, women and song and before he gets too old – then rely on the state to keep him.
“No one has the right to pass on an inheritance.”
I find this a really scary comment.
Sure, tax the gift recipients as if it were income, can’t disagree with that.
Sure, no problem with someone selling a house to fund care (they’re in effect moving house, after all).
But to say that someone does not have the right to dispose of their property as they see fit, either in lifetime or on death, is completely unacceptable in a free society and shows deep authoritarian instincts.
RE:REAL LIFE EXAMPLE
So should your parents be denied assistance at the end of their lives or are they as feckless as your neighbour?
If he is renting the benefits of inheritance of the property will go to the landlord presumably, so the tenant will pay for the landlords care.
If he is out spending money, he will be adding to GDP just as you are by paying your mortgage, perhaps more so by spending on a wider range of goods and services rather than turning it over to the financial services sector.
In our fast paced world it is extremely hard to predict and provide for the future, so living like there is no tommorrow is certainly one rational reponse.
reading this blog is like stepping back into the 1960s when pro-communist attitudes prevailed.
What part of the sixties was this?
As the working middle class are increasingly geographically mobile, then higher tax will directly correlate to higher outward emigration.
That’s Ok, they can be replaced, they just shouldn’t expect to have their precious IP protected here at the citizens’ expense, or not have tariffs imposed on their products.
I would have thought that the idea thta passing on an “inheritance” should be first call on an estate before paying creditors was something that both left and right could agree on without question.
Alex, when you have destroyed all communities and crushed working people underfoot, what then? Maybe Richard is stepping back to the 1960s (An era of social mobility, of which you would disapprove) but you seem to be stepping back to the Victorian era!
“why the heck shouldn’t a person be obliged to pay for what they need?” Quite right – but you have just spotted the flaw with the NHS, the Police, The Armed Forces, etc etc etc. Why distinguish between these public goods and provision of health care to the elderly?
“All the world’s a stage” — Wm Shakespeare
We play a role on a stage where nothing is lasting and everything changes. As on the stage/game of “Monopoly” some of us attain wealth, own hotels, streets and shares in utilities; whilst others are lucky to have a house in a poor area – or even find themselves in jail.
But when play is done everything is returned to the box allowing others to play on the stage from the same starting position; and the next generation has an equal opportunity, and perhaps greater stimulus, to generate personal wealth and in due course also return it to society.
Without “inherited” wealth capitalism has a better chance to thrive.
When everyone pays taxes due society has a fairer chance to thrive.
David
I may as well give up trying to do my best and the right thing at once, and live like there’s no tomorrow.
What is wrong with this?
Excuse me but this simplistically puritan idea of deferring real life experience is madness.
It is economically mad – it deprives businesses of income they may otherwise have earned from you. Moroever, you defer the benefit and get run over by a bus somewhere down the line. All that accumulated capital is wasted.
It is physically mad – your best years are your younger years when your body is at its fittest and can take a pummelling. You’re not going to scramble up to Macchu Picchu in your seventies (if that’s when we eventually get to retire).
The Right need another arguments than these foolish ideas of thrift.
Some of the comments seem confused here, there’s no suggestion of taxing anyone twice or controlling how they spend their personal surplus. Any tax would be levied on the recipient. The idea of protecting certain income streams from taxation is illogical. As for describing these sorts of things as some form of 60’s communism, that’s just bizarre. It’s easy to argue against inheritance from a free market perspective as well.
People get awfully upset about IHT and social care. I can’t really see why to be honest. The best gift you can give your children is to equip them the make their own way in the world, in my personal opinion. Those people I meet who survive on inheritances from wealthy relatives often seem to be lacking in the spirit to do anything for themselves. Perhaps that’s where the saying “clogs to clogs in three generations” comes from…?
Otherwise, tax and welfare is a zero-sum game. If you assume a certain amount of welfare for citizens then you need to collect a certain amount of tax to pay for that. Whether that’s IHT, income tax or whatever. Those advocating free care for all elderly people irrespective of one’s ability to pay should bear in mind that this will need to be funded and they are advocating taxing todays young working people to pay for the care of today’s elderly people (who never had to pay taxes to fund universal care for *their* elders), which to me seems quite unfair.
The alternative is to advocate throwing infirm and poor elderly people on the street, which is inhumane.
“Maybe Richard is stepping back to the 1960s (An era of social mobility, of which you would disapprove)”
Well, at least we can agree that grammar schools should be brought back then.
“Alex, when you have destroyed all communities and crushed working people underfoot, what then?”
You see, this is where I lose the “logic” of the Left. Where is the leap from believing that people should be able to dispose of property as they wish to wanting to destroying all communities and crush working people?
Maybe if the Left wants to know why a Left-wing party has not triumphed in a general election in the UK since 1974 it should stop bandying about Victorian values and start getting in touch with real working people’s concerns?
@PSG
Note that the game of Monopoly was derived from the Landlords Game (Lizzie Magie) to demonstrate the iniquities of land monopoly and the solution to it: land value taxation, a la Henry George.
@BenM
This ignores the fact that many people save in part to be prepared for future emergencies. A person with no savings is completely dependent on others for aid where a person with savings can use them in addition to whatever aid they may receive from the State.
After all, a person can be run over by a bus, and live.
@Alex Mugleston
There are just too many comments made me to respond to and perhaps, many of them don’t need response in any event.
Yours does require a response because you are either deliberately misunderstanding me, or I did fail to make myself clear, in which case I apologise. I am not being authoritarian in the least. What I’m saying is that nobody should have a right to assume that because they have generated some weelth they can pass it to their heirs and in the process ignore their obligation to provide for themselves. Surely, that is entirely consistent with a libertarian viewpoint?
I’m not for a moment saying people should be denied the right to pass anything to their children that I can see absolutely no reason at all why that right should exist at cost to other taxpayers
Can you explain why it should?
Can you explain why this subsidy from the poor to the rich should be given?
@Alex Pegia
What utter nonsense.
Of course I care about people – they are my absolute priority – over and above all else
You put capital first
I don’t
But don’t for a moment say that this makes me a Communist. It makes me a caring, compassionate and concerned human being who seeks to maximise the welfare of my fellow human beings.
and yes, I’m saying that the alternative means that you are not
@David
it takes a particularly bizarre logic to think up your example
Worse, your example ignores a great many facts
Take, for example, the fact that the person who is bent during a lifetime has as a consequence paid substantially more tax through VAT and other consumption levies
And take the the fact that by spending they will have almost certainly generated substantially more employment and well-being in society whereas if they had saved they would probably only have generated asset bubble booms and busts at cost to the rest of society because that is, unfortunately, what most savings have been used for by the financial services industry for a long period of time. They have not been put to productive use to create employment, which has been the downfall of our economy
So, there is every reason for thinking that in some senses the person who has spent might have been more responsible, quite contrary to your logic and most certainly they have paid their dues to society and can expect to be cared for now in return
I offer this explanation a little tongue in cheek – let me be clear – but it is also entirely plausible
The fact that the person who has to sell their home to pay for care is, in fact, effectively now paying tax at that point only compensates for the fact that they did not pay tax earlier , which the other person already has. Is that a wholly unjust outcome as a consequence?
as an examiner might say, discuss, but do so in the context of the real economy, not the one that exists in your fantasy