WOULD YOU LIKE TO PROTECT YOUR FAMILY HOME FROM BEING TAKEN TO PAY FOR YOUR CARE?

Current rules and regulations

Most couples are not aware that if they require care at a later date the Local Authority will look at the couple’s assets on a means-tested basis to see whether the Local Authority will contribute towards an individual’s care.

When a financial assessment is carried out by the Local Authority the assets would have to fall below £14,250 before the Local Authority will contribute towards any care fees. At JH Wills Ltd, we have dealt with individuals’ estates where the person who made a will thought that they would be leaving their children the family home ranging from £120,000- £500,000 but the surviving spouse has since gone into care and the actual amount received by the children is £14,250.

You can see how this is easily done, if the first person to die (in a married couple) leaves everything to the surviving spouse and the spouse then goes into care, it doesn’t take much time for a person’s estate to diminish from £120,000 to £14,250 when the average weekly cost of care is £900.

One particular case we dealt with, a client had left the whole of his estate to his wife in his will, and subsequently, she went into care. The original value of the estate that the wife inherited was £280,000, which consisted of the property that they owned together, along with bank accounts and savings etc. She ended up in care for 4 years at a cost of £46,800 per year, and when we came to deal with the estate, the two children received £92,800 between the two of them rather than the £280,000 that their parents had hoped they would leave to them.

CARE FEE PLANNING

WOULD YOU LIKE TO PROTECT YOUR FAMILY HOME FROM BEING TAKEN TO PAY FOR YOUR CARE?

Current rules and regulations

Most couples are not aware that if they require care at a later date the Local Authority will look at the couple’s assets on a means-tested basis to see whether the Local Authority will contribute towards an individual’s care.

When a financial assessment is carried out by the Local Authority the assets would have to fall below £14,250 before the Local Authority will contribute towards any care fees. At JH Wills Ltd we have dealt with individuals estates where the person who made a will thought that they would be leaving their children the family home ranging from £120,000- £500,000 but the surviving spouse has since gone into care and the actual amount received by the children is £14,250.

You can see how this is easily done, if the first person to die (in a married couple) leaves everything to the surviving spouse and the spouse then goes into care it doesn’t take much time for a person’s estate to diminish from £120,000 to £14,250 when the average weekly cost of care is £900.

We dealt with one particular case when a client had left all his estate to his wife in his will and she subsequently went into care. The estate that the wife inherited was £280,000 taking into account the property that they owned and banks accounts, savings etc, but she was in care for 4 years, at a cost of £46,800 per year, and when we came to deal with the estate the two children received £92,800 between the two of them rather than the £280,000 that their parents had hoped they would pass to them.

What can you do about it?

We have many clients who approach JH Wills wanting to sign their property over to their children, with the aim of preventing the house from being taken into account if the Local Authority was to later carry out a financial assessment. Unfortunately, this is not the correct way in which we would recommend planning for care fees, as the Local Authority have an unlimited amount of time to look back at what assets that individual had and therefore if the Local Authority is of the view that the person who is going into care has ‘deliberately deprived’ themselves by giving the property away, they can seek to have the person who received the asset pay for the care. Not only does the outright transfer not work for care fees, but it is a high-risk step to take, as the property would no longer be owned by you and as such, you could be told to leave the property, or the property could be taken into account if your children were to divorce later in life or were struggling with financial difficulties. This type of planning is certainly not something we would recommend. We recommend changing the way in which you own your property from a joint tenancy to a tenancy-in-common and leave the property on trust for the surviving spouse instead of gifting the entire estate to one another, but it is important that couples act now as this isn’t something that can be done when one party dies or perhaps has suffered a stroke, as they will not be in a position to give us instructions. Other than care fee planning, our clients have used this type of planning to prevent their children from losing out later in life if their spouse was to remarry.

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