It’s no secret that care fees are expensive, and contributing towards care is a concern for many. You may be worried that you’ll lose your assets paying towards your care and won’t be passed to your chosen beneficiaries.
The Current Care Fee Situation
Currently in England, if your capital is more than £23,250 you will be expected to contribute towards your care fees. In many cases this can include your family home. You’ll no longer need to contribute if your capital is less than £14,250.
Can I Transfer My Property into My Children’s Names?
Although you could transfer your property into your children’s names, this is not recommended. Some risks of transferring your property into your children’s names include:
- The property being sold or remortgaged without your consent.
- The property being sold during divorce proceedings if one of your children was to get divorced.
- Falling out with one of your children, who then no longer allows you to live in the property.
- Your children becoming bankrupt or needing care themselves.
- Impacting your children in terms of Stamp Duty and Capital Gains Tax.
- Deprivation of assets – the local authority could still treat you as the owner of the property.
Can I Transfer My Property into a Trust?
Some people wish to transfer their property into a trust during their lifetime so that it will not be considered part of their capital for care fees. However, although transferring your property into a trust may seem beneficial, depending on your circumstances, trusts may have Inheritance Tax implications that should be considered.
Does Transferring My Property into a Trust Guarantee Not Having to Contribute Towards my Care Fees?
Not necessarily. The local authority could treat you as still owning the property if it is established that the disposal was made deliberately to deprive you of assets. The local authority can look back indefinitely, and people wrongly assume a 7-year rule applies.
The Solution
If you own your property jointly with a spouse or partner, you could include a Life Interest Trust in your wills. It may be necessary to change the joint ownership of the property for the Life Interest Trust to be effective.
Instead of leaving your share of the property outright to your spouse or partner, your wills would be drafted to outline that your share of the property is held in trust, while allowing your spouse or partner the right to remain in the property rent-free during their lifetime. After the death of both of you, your respective shares would pass to your chosen beneficiaries.
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Disclaimer
The contents of this blog or any other published by Talbots Law cannot be considered as legal advice. You should take no action without prior consultation with a qualified solicitor or legal professional.