My name is Charlotte Searle, I am a solicitor and fully qualified member of the Society of Trust and Estate Practitioners (STEP) and Association of Contentious Trust and Probate Specialists (ACTAPS).
A question which arises time and again when clients are seeking to put their affairs in order in later life is:
Should I give my home away to avoid having to sell it to pay for care home fees?
If you need care the Local Authority will assess your finances. If you have assets of more than £23,250 you are likely to have to pay towards your care.
There are frequent media stories about consumers signing up for schemes promising to help protect the family home from care home fees by placing it into a trust or giving the home to other family members, only to find the scheme ineffective and that they have wasted thousands of pounds on fees.
If you give away an asset (by putting it into a trust or giving it to another person) with the intention of avoiding care home fees the Local Authority can include the value of that asset in their assessment.
If you have other genuine reasons to give your property away you may be able to argue the property should no longer be assessed as an asset belonging to you. However, for most people there are no advantages to giving their home away indeed there might be significant disadvantages.
For example, you no longer control how or when the property is sold, who lives there or whether the property should be mortgaged and if the recipient gets divorced, your property might have to be sold.
If the property is placed into a trust, there might be taxes to pay and if you give it away your estate may no longer benefit from the additional tax allowance which can currently save married couples / civil partners up to £100,000 in inheritance tax.
It is therefore important to take expert advice before entering into a scheme to deprive yourself of an asset as significant and valuable as your residential home.
There are options to protect your own assets when you die, which can also have the benefit of avoiding those assets being added to funds available to pay for another person’s care.
Your Will could limit the benefit from your own assets which pass to your spouse / civil partner if they survive you, protecting your share of any joint assets to ultimately pass to your children / other beneficiaries. This arrangement is legitimate and effective for protecting the share of assets belonging to the first to die from various threats, should the circumstances of the second to die change e.g. require long term care.
If you are planning to put in place arrangements with your assets trying to avoid care home fees, ensure you fully understand the implications and seek expert advice first.
Neale Turk LLP has been providing local, friendly, expert legal advice for over 60 years. For advice on Wills, Probate, Trusts and Court of Protection matters contact myself, Charlotte Searle – firstname.lastname@example.org