Selling your home to go into care, how to avoid it?

oap wrote:

Hello, we were concerned today watching Working Lunch on BBC2 to hear that trusts made to avoid selling your house to pay for care could be cancelled in retrospect very soon, also you can be asked (if you have given your property to your children) have you ever owned a property?

The idea that you can take proper financial advice to arrange your finances in a perfectly legal way to "Avoid" rather than "Evade" tax or other potentially expensive dispersments and then have the law changed retropectively so that what you have arranged legally today will be considered illegal tomorrow is somewhat shocking but as the US election has shown Turkeys do vote for Xmas and I suspect the same will happen here. No doubt after recent happenings in the Lords this administration will be seeking to punish those who dare to question the prudence and legality of our current ethically challenged leaders so individuals rights will be further eroded.

At the moment we have done nothing about our property and we were thinking of a trust or something, so that is out now, does anybody know much about selling your home to an Insurance 'Company and getting the cash out that way, we know you have to be careful, but has anybody done it on here? We are 69 and 74 at present.

Information about Equity release HERE Help the Aged
AGE CONCERN Raising income or capital from your home - FS12

House value about £240000! We are hoping the inheritance tax will be raised, our house was £43000 19 years ago. Any helpful ideas would be appreciated. Thank you, oap

It might also be worth talking the issues through with your children. Having a play with the life expectancy calculator
here and having a look at the life expectancy tables here
may give you an idea of how long you might be expected to life, given your current age and lifestyle. The problem with taking out capital from your home is that the interest mounds up and is compounded cumulatively so that you may find, if house prices don't rise or actually fall, there is nothing to leave your heirs. Maybe that doesn't bother you or them, for many the inheritance will come at a time when it isn't as useful as it might have been earlier.
There are some cunning plans whereby you convert the money from your property into an annuity to give yourself more current income to live on, but for folk on Pension Credit this is probably counterproductive and anyway annuities aren't particularly generous at the moment.

I think you should also take into account the fact that in 2004 the chance of living in a long-stay hospital or care home by age was:
0.9% (65-74) 4.3% (75-84) 20.7% (85 plus).

If you have guessed from the initial links how long on average the insurance folk think a person your current age might live and compare this with the chances of actually needing to go into a home you might find it really isn't a good investment to pay for a plan you might never use. Even if you live to over 85 you've still only a one in five chance of needing a place in a care home so for 4 out of 5 purchasers of these plans it's money down the drain.

deadi wrote:

Ted is missing the point - nobody should take out such a plan in advance of when it is needed its a waste of money. Give me a better idea than spending £25000 pa from diminishing assests to fund care?
deadi

But I am sure you are aware of the facts, which are the majority of folk who enter Care home do so after the age of 85 and the majority of these are dead before six months is up.

Ted_Hutchinson wrote:

I think you should also take into account the fact that in 2004 the chance of living in a long-stay hospital or care home by age was:
0.9% (65-74) 4.3% (75-84) 20.7% (85 plus).

If you have guessed from the initial links how long on average the insurance folk think a person your current age might live and compare this with the chances of actually needing to go into a home you might find it really isn't a good investment to pay for a plan you might never use. Even if you live to over 85 you've still only a one in five chance of needing a place in a care home so for 4 out of 5 purchasers of these plans it's money down the drain.

Hi Ted

I'm very glad you've posted these figures. There seems to be an awful lot of hysteria about. The number of times I've seen messages on various sites saying e.g. 'how can I keep my home/my parents' home out of the council's clutches if they need to go into a home?' I keep saying that it's only a minority of people, even among the oldest age-groups, who need full-time residential care, and it's 20.7% by your figures.

We are a couple aged 69 and 70, we're owner-occupiers, have already taken out a 'lifetime mortgage' i.e. equity release, this was to pay off the original mortgage. I'm still paying into a stakeholder because I reckon when we're 75 we might be glad of a little extra. Whatever we have, we intend to use for us first, and whatever is left is planned to jump a generation and be split between 5 grandchildren, 3 of mine and 2 of his. We really are NOT going to beat ourselves up about whether we'll need to go into a home in the future - we're still enjoying life and looking forward to several more happy years together.

Why worry about what might not happen, as Ted says?

Also, I'm concerned about someone who describes himself/herself as an OAP. This is a really objectionable term - ageist and demeaning, as well as inaccurate. Senior, pensioner, older person, but please not OAP!

Margaret