Concerned about your property being sold to fund your future care fees?

The Issue

You probably own your home as joint tenants if you are a couple and solely if you are single. For couples this means you own it wholly, jointly and severally. Ultimately therefore you do not own it 50:50 as you might have assumed. You actually own all of it together and when one partner dies the surviving partner owns it solely and absolutely.

It is sole and absolute ownership that enables a whole property to be taken into consideration as an asset by the local authority and puts the property in danger of needing to be sold to fund care.

The Reality Today

 

The care Act 2014 introduced in April 2015 allows local authorities to assess your assets to determine if you need to pay for your own care under the new charges and assessment of resources regulations.

Currently if you have assets above £23,250, you are on your own and require care, you will probably have to pay for it all - currently averaging around £1,000 per week.

Savings, cash and income would be used first and then your property would need to be taken into consideration. You would be expected to pay for all of your care until such time as your assets were depleted to below the £23,250 threshold.

You would then pay for a proportion of your care until your assets were below £14,250 - at which point all your future care would be paid for after any relevant income was taken into account.

The Solution

For couples, simply by changing the way you own your property well in advance of any care considerations i.e. from joint tenants to tenants in common and setting up two property Trusts immediately for both halves of the property to be conveyed into will protect the integrity of your home should you ever require care in the future, so long as avoiding care fees was not the primary motivating reason behind the implementation of the strategy - i.e. you should also be looking to protect your half of your property should your spouse remarry after your death, or you should be looking to ensure that your children would not lose 50% of their inheritance should they be made bankrupt or divorce after your death for example or you should be looking to prevent a generational inheritance tax burden in the future.

These are all sound reasons for implementing this strategy which in themselves would not be deliberate deprivation of assets, but the implementation of which has a distinct side benefit of protecting the integrity of the property should care be required in the future.

For sole owners the process is simply to set up a Trust now and convey your property into it which will produce the same result but again this must be well in advance of any care considerations and not be for the sole and overrising purpose of preventing your home being used to fund your care in the future –there must be other good reasons as highlighted above.

The Reasoning

When you own your home as Tenants in Common you actually own half each. Once you transfer your half of your property into Trust it is 100% protected against attack from, divorce, bankruptcy (after 5 years), care fees* and the re-marriage of your partner after your death causing the sideways disinheritance of your children and ultimately your property would not need to go through probate, saving £1000s in probate fees. Through the way that assets are appointed out of the Trust, your beneficiaries would also be protected after your deaths against losing half of their inheritance through divorce, dying and a spouse inheriting rather than a blood relative, bankruptcy, their own care fees and ultimately generational inheritance tax.

Your surviving partner would usually be one of the Trustees of your Trust along with up to 3 children and would have a life interest in your half so they could not be made homeless and would be secure until their death without absolutely owning anything themselves which means that they would have a say in what happens to the property and could downsize if they wished but could not lose the property or have it taken away from them or have a charge put on their half as would be the case if they had simply severed the tenancy and put 2 Trusts within their Wills for example.

The children and/ or whoever else is also nominated as ultimate Trust beneficiaries would then be able to inherit both halves of the property when the surviving partner dies (as opposed to just one half with a Will based Trust where the survivor has gone into care and a charge has been put on the survivor’s half of the property). The supreme benefits of this strategy as opposed to just having Property Trusts in your Will though are that it not only completely protects both halves of the property if both parties go into care before the death of either (a Will based Property Trust won’t protect either half if both parties go into care before either party dies)) or care has to be brought into the home and dementia tax style proposals are implemented in the future (which again would not be protected against at all with a Will based Property Trust) but also once the property has been disregarded for care the property can then be sold at any time and the resulting proceeds be fully protected for the whole family within the Trusts with no further negotiation with the Local Authority required.

Call us now on 01903 649021 for a friendly chat about which of our new packages would be of best benefit to you and your family.

*Remember if you have reason to believe that you may go into care soon or if your sole reason for implementing this package is simply to avoid paying foreseeable care fees and you are not implementing it for any other reasons such as protecting your family against divorce, bankruptcy, marriage after death or generational inheritance tax then you could be accused of deliberate deprivation of assets.