Residential Care Fees could cost you your home! If you own property, you may have to sell your home to pay for your care fees.
Beware: It is unlawful to deliberately set out to deprive Social Services.
If in later life you were to require residential care, the local authority will carry out a means test to determine your contribution toward the cost of your care. Property, savings and investments will form part of this means test and if these total more than £23,250 you will have to meet the full cost of your care. Unless your care fees can be met from your savings and income, your property will have to be sold at some point to pay these fees. If you are in care longer than 12 weeks, then the proceeds of sale of your property will be used for your care fees. Once your assets have been depleted to £23,250 you will no longer pay the full cost of care but will pay a diminishing rate until your assets are reduced to £14,250. This means you could be left with only £14,250.
Beware: Some people believe that renting or giving their home to their children protects it from residential care costs. It does not. Legal action brought by Social Services will show that the "gift? is an attempt to circumvent the Law, and thus the 'gift' becomes null and void. Worse still, if you give your property to your children during your lifetime there could be further unforeseen repercussions, such as:
Don't risk losing your home through the above - deliberate deprivation is unlawful and will fail. However, during your home visit your consultant will advise you of your rights and explain what can be done to legally protect your children's inheritance. Learn the facts from a trained legal professional rather than an unqualified friend who mistakenly thinks they know better! Depending on your circumstances we may be able to improve your position and your children’s inheritance.
There is more than one type of property trust available to protect your property and each particular trust has its own advantages and limitations. The essence of how property can be protected is explained further below.
In order to select and then adapt the best protective property trust to meet your requirements, it is essential to understand your particular circumstances and needs first.
Protecting your Property for your Beneficiaries.
You must own your property in the right manner if you wish to safeguard your children’s inheritance. If you are “joint owners”, then no matter what you write in your will, your property will always go to the surviving joint owner, which is not always desirable. To avoid this, the Joint Ownership of your property will have to be changed into Tenants in Common and we would arrange this for you through HM Land Registry (simultaneously with the drafting of your will).
Each one of the two Tenants in Common (also known as Owners in Common) is then able to give his or her half share in the property away as they see fit via their will. Effectively, after the demise of the first of the two tenants in common, the deceased person's half share of the property can be held in a trust for the children, leaving the surviving spouse with a life interest in the whole of the property yet with the ownership of only half the property.
As a result, if the surviving spouse or partner were to remarry, your children will not have lost their inheritance to the new spouse as they would have gained an interest in half the property upon the first death. A further consequence of this gift is that Social Services will have lost their claim on what has now become the children’s share. Therefore, if the surviving spouse or partner were to subsequently require care, Social Services could only lay claim to the survivor's half share of the property. Giving away half a property is not always desirable either, so further steps may be taken to address this point and we would be happy to advise you further.
A limitation to the above simplified trust is that the survivor loses half the property upon the death of the first spouse. As this is not always desirable, a different trust may be used to leave the surviving spouse with more control over the ownership of the property which still provides legal cover for your property. Some trusts can legally shelter monies and investments as well as property. It is essential for us to understand your circumstances fully so that we may advise you which trust would be most appropriate to your circumstances.
We can do this for you.
In order to draft a suitable trust to protect your property it is essential that your property be owned in the right manner. The joint ownership of your property will have to be changed into Tenants in Common and we would do this for you through HM Land Registry simultaneously with the drafting of your will. Each one of the two Tenants in Common (Owners in Common) is then able to give his or her half share of the property away as they see fit under their Will.
Again, it is essential for us to understand your circumstances fully so that we may advise you which Trust would be most appropriate as there are further subtleties involved. What you may have noticed above is that the survivor still retains a half share of the property and therefore that half share of the property could still be claimed by Social Services. We can advise you further on this matter.