Preparing for Care
Preparing for care
There is a great deal of publicity about people being forced to sell their homes to pay for care homes in later life. Paying for care can be an issue for some people, but you must take advice from a specialist solicitor before embarking on any action which may mitigate such fees, as there can be unwanted consequences.
Gifting your property to your children or into a trust during your lifetime is unlikely to be successful. Such transactions can be disregarded by the authorities when calculating your assets for a financial assessment. You may be deemed to have ‘deliberately deprived’ yourself in order to put yourself into a better position for means testing. You are free to make gifts to reduce your capital but you must be aware that such gifts could affect your eligibility for local authority assistance with care fees in the future.
There are options available to preserve some inheritance for your loved ones. One way is for couples to include ‘Life Interest Trusts’, also known as ‘Interest in Possession Trusts’ in their wills. This can protect part of the home for the couple’s family by excluding it from any financial assessment by local authorities for the contribution towards care home fees.
It is important to take advice from a solicitor if you wish to go ahead with Life Interest Trusts. They must be set up in such a way that they are flexible enough for the surviving partner to move house if they wish to and to have access to the capital if they need it. It is also essential that the joint tenancy of your property is ‘severed’, so that you and your partner own your property as ‘tenants in common’ and are therefore free to leave your respective half shares into the trust. The solicitor will also advise you on the tax implications of the trusts, which are generally favourable. A correctly set-up trust can preserve the inheritance tax nil rate band of both parties.
If your home needs to be sold to pay for nursing home fees, remember that in some circumstances a sale cannot be forced if certain relatives live there as well. You should bring this to the attention of the professionals undertaking your care assessment.