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  • Ted_Hutchinson
    • #2
    • 27th Nov 06, 10:32 PM
    • #2
    • 27th Nov 06, 10:32 PM
    Treatment of the former home as capital for people in care homes - FS38
    Paying for care in a care home if you have a partner - FS39
    Transfer of assets and paying for care in a care home - FS40

    The above links are from Age Concern
    Help the Aged have a similarly helpful information page here

    The matter is far more complicated than you may think because if you give away your home, but continue to live in it you are benefitting from that gift. The income tax people will want to know if you are paying rent and where the rent's going. There have been too many cases where people have done this only to find their child or the child's partner exerts pressure to evict the tenant so they can dispose of the property. I know you think it could never happen to you but you can't tell what's going to happen in five years time.

    Do be aware that MOST people don't go into care homes. When they do most people are not there for years on end.
    There are other threads here where these matters have been previously discussed. Try searching this forum for "Care home costs"
    Last edited by Ted_Hutchinson; 27-11-2006 at 10:40 PM.
  • A Nice Englishman
    • #3
    • 27th Nov 06, 10:35 PM
    • #3
    • 27th Nov 06, 10:35 PM
    This article explains it pretty well
    http://www.direct.gov.uk/HomeAndCommunity/SocialHousing/CareHomes/CareHomesArticles/fs/en?CONTENT_ID=10031523&chk=W2hEIM

    In particular

    It is against the law to transfer ownership of an asset to another person specifically to avoid paying your care home fees. The law states that if you’ve transferred an asset to another person within the six months before you get a place in a care home, your local council can make you pay your care home fees.
    You can find any answers you want on the Internet.It's working out which ones are right that is so difficult.
  • Equanimity1
    • #4
    • 28th Nov 06, 9:51 AM
    • #4
    • 28th Nov 06, 9:51 AM
    Thanks for this I will start doing my homework...will be gratefull for any other comments or experiences .....
  • EdInvestor
    • #5
    • 28th Nov 06, 10:11 AM
    • #5
    • 28th Nov 06, 10:11 AM
    As far as care costs are concerned the key thing is to split assets between spouses: switch ownership of home to "tenants in common" (and then make wills leaving everything to each other) and divide up savings as well.

    This means that only the assets owned by the individual in care can be used to pay for care, otherwise the person still at home can be left with no money. The house cannot be taken while the spouse ( or a child over 60) lives in it.

    The rules are very complex, but as Ted says, not many people are actually affected.
  • Ted_Hutchinson
    • #6
    • 28th Nov 06, 11:20 AM
    • #6
    • 28th Nov 06, 11:20 AM
    As Edinvestor says it is very important to arrange your finances in such a way as to minimise inheritance tax and you really need a professional adviser to ensure you've taken the right steps.
    I do think that you still need control over your finances so that should the worst happen and you have to go into a home, either residentail or nursing, that you, or your guardian, have the power to make decisions in your best interests.
    The local authority are strapped for cash and will offer the cheapest accomodation available. There may be nothing wrong with their choice but it may not be in the right place for your visitors, it may simply not be right for you although it meets all the current legal requirements. If you do not have the cash available to decide for yourself or your aged parent that they need to move to a place where they can have visitors more frequently or a more amenable enviroment what are you going to do.

    By the time most elderly folk are in this position their children, even their grandchildren will have homes and this addittional inherited wealth from the old person home will be spent simply on holidays or moving upmarket. The extra wealth that has been generated in the old persons home should in my view be spent first to ensure that persons needs are met FIRST, this means retaining sufficient funds to enable them or their guardian (should Alzheimer's strike) to have the flexibility of independent choice should it be needed. I really don't see the current priority for children to get their hands on the capital to squander it on new cars and flash holidays should take priority over the needs of the elderly person and their right to spend their remaining years with as much dignity and care as possible.

    I think it is misplaced generousity for elderly people to think their first priority should be to pass on wealth to their children or grandchildren rather than spend it on themselves ensuring they have a reasonable standard of care in their last few months.

    I would be very disappointed if my children tried to persuade me to pass on the value of my house to them rather than waste it on my getting proper care in my last few months.
  • notakid
    • #7
    • 1st Dec 06, 10:38 PM
    • #7
    • 1st Dec 06, 10:38 PM
    Another thing to keep in mind as it happened to friends of my parents is when you sign over your house to your children you also are signing it over to their spouses. If the marriage then fails the spouse can also claim on the signed over house. This happened about 10 years ago and maybe people are more aware of the pitfalls now but it is something to keep in mind. (My parents friends where forced to move as they had no legal redress) It scared my parents so much that they abandoned the whole idea. Which is fine by me as I agree with Ted that the house should fund them when they need it not me.
    But if ever I stray from the path I follow
    Take me down to the English Channel
    Throw me in where the water is shallow And then drag me on back to shore!
    'Cos love is free and life is cheap As long as I've got me a place to sleep
    Clothes on my back and some food to eat I can't ask for anything more
  • margaretclare
    • #8
    • 3rd Dec 06, 8:05 PM
    • #8
    • 3rd Dec 06, 8:05 PM
    I do think that you still need control over your finances so that should the worst happen and you have to go into a home, either residential or nursing, that you, or your guardian, have the power to make decisions in your best interests.

    The local authority are strapped for cash and will offer the cheapest accomodation available. There may be nothing wrong with their choice but it may not be in the right place for your visitors, it may simply not be right for you although it meets all the current legal requirements. If you do not have the cash available to decide for yourself or your aged parent that they need to move to a place where they can have visitors more frequently or a more amenable enviroment what are you going to do.

    By the time most elderly folk are in this position their children, even their grandchildren will have homes and this addittional inherited wealth from the old person home will be spent simply on holidays or moving upmarket. The extra wealth that has been generated in the old persons home should in my view be spent first to ensure that persons needs are met FIRST, this means retaining sufficient funds to enable them or their guardian (should Alzheimer's strike) to have the flexibility of independent choice should it be needed. I really don't see the current priority for children to get their hands on the capital to squander it on new cars and flash holidays should take priority over the needs of the elderly person and their right to spend their remaining years with as much dignity and care as possible.

    I think it is misplaced generousity for elderly people to think their first priority should be to pass on wealth to their children or grandchildren rather than spend it on themselves ensuring they have a reasonable standard of care in their last few months.
    by Ted_Hutchinson
    Ted, I couldn't agree with you more. I have said the same thing on numerous occasions and I've always been shouted down by people whose main priority, as they express it, is to 'save my inheritance from the council/the Chancellor'. They express it in a quasi-altruistic mode i.e. 'my parents/grandparents have worked hard, saved, spent a lifetime building up assets, why should those assets be 'wasted' on paying for their care?'

    I have said many many times that a person's assets should be used primarily for that person, that an inheritance does not exist until someone is dead, that no one has a divine right to an inheritance from an earlier generation, and that most of us didn't have one and managed OK. I still do not see how money spent to ensure better quality care, choice and comfort can be said to be 'wasted' and I have always asked the question 'and who do you suppose is going to pay for this care?' The answer is always 'the taxpayer' and that's you and me. The fact that grandparents/parents paid taxes all their lives counts for nothing, it's the taxes that are currently being paid that matter. Whether that should or should not be the case can be argued about till Kingdom come.

    Margaret
    r ic wisdom funde, r wear ic eald.
    Before I found wisdom, I became old.
  • Mrs pbradley936
    • #9
    • 3rd Dec 06, 8:37 PM
    • #9
    • 3rd Dec 06, 8:37 PM
    Ted you are such a sensible person.
  • Fester
    Is it possible just to add the childrens names (or anyone else you want) to the house deeds?
    I mean can you just visit a solicitor and add on any names you like to the deeds?
    Just wondered.
  • Bossyboots
    Is it possible just to add the childrens names (or anyone else you want) to the house deeds?
    I mean can you just visit a solicitor and add on any names you like to the deeds?
    Just wondered.
    by Fester
    You can do it without even using a solicitor if there is no mortgage. The form (TR1) is on the Land Registry website.
  • Fester
    You can do it without even using a solicitor if there is no mortgage. The form (TR1) is on the Land Registry website.
    by Bossyboots
    Cheers BB.

    Found the form and will have a think.

    So I presume if you add childrens names onto deeds , the property cannot be sold to pay for any home fees?

    I mean they cannot enforce selling a property that is owned by others as well as person requiring residential/nursing care?

    Or if you are say, one of four names on the deeds, can they take into consideration that you have wealth to the value of 25% of the property and take that into account in their calculations?
  • Bossyboots
    Cheers BB.

    Found the form and will have a think.

    So I presume if you add childrens names onto deeds , the property cannot be sold to pay for any home fees?

    I mean they cannot enforce selling a property that is owned by others as well as person requiring residential/nursing care?

    Or if you are say, one of four names on the deeds, can they take into consideration that you have wealth to the value of 25% of the property and take that into account in their calculations?
    by Fester
    No it doesn't work that way because you will be making a gift with reservation and consequently the whole property can still be deemed to be yours. This is also deprivation of assets and a charge for the value of the nursing home fees can be put on the property to be recouped upon any sale.

    If there is a long time between the signing over and a care home needed, then your position is stronger but if you died within 7 years of executing the transfer then IHT is also payable under the gift with reservation rules if you still live there.

    You also must consider the point raised here about spouses and divorce. A spouse will be entitled to make a claim against the property. My elderly, disabled former neighbour is a prime example of this, that is why she is now my former neighbour.

    Also, what if one of the children became bankrupt?
  • Torry Quine
    You must get a solicitor involved to get the house signed over legally. If the elderly person goes into care the local authority can still treat the property as if it was still belonging to them but the longer that has passed the less likely this is. there is no time limit for this, it is up to individual councils to make up thier own rules which is unfair.:
  • HOWMUCH
    This happened to my Dad when it looked like my Grandad would have to go into a home just before he died actually, when the social worker came to do the assessment he asked Grandad about the house. My Grandad said that the house was my Dad's (he had actually bought the house before he met my Mum in 1982) it is an ex-local authority property, and his name was on the deeds every since 1982. My parents married in 1983, Dad luckily never took his name off the deeds but Dad had to prove everything and it wasn't straight forward with the council even under these circumstances, Dads name had been on the deeds since day one of the purchase over 20 years.
    The council are getting very strict on tennent's in common too, not just when you sign a property over to family.
  • Bossyboots
    You must get a solicitor involved to get the house signed over legally.
    by Torry Quine
    That is simply untrue (unless there is a mortgage and then it will be the lender that requires a solicitor's involvement). You can do the documents yourself if you are even reasonably competent.

    If a deed of trust is required then that is something that should be drawn up professionally, but that document will not prevent the issues that have been raised here coming to the fore.
  • nearlyrich
    I would be very careful of signing away rights to assets that you may need to sell in order to buy a more suitable property, what if one of the "benificiaries" doesn't agree with the move, you could be stuck in a house that's too big, too expensive to run, maybe with stairs that you can't manage anymore because someone else wants to keep the house and live in it after you are gone.

    I have worked all my life and if I die having spent my last fiver my children will have to get over it, I would rather choose care based on my needs and preferences if I have to than accept the LA choice if it's not suitable.
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  • Tim_L
    Another thing to watch with transferring ownership in part is that it can create a very complex capital gains tax situation. Some of the things people do without advice staggers me - I've a good mate whose house is in his, his mother's and his sister's name, as his mother's and sister's. This was a DIY attempt at removing IHT or care home liabilities, but they are now absolutely stuffed as no one of them can sell and move without generating a stonking CGT liability for the other two.

    I agree with many of the people above, really - assets are for the benefit of the owner during their lifetime, and it's questionable that I (as a taxpayer) should be expected to pay for care for people who have assets of their own.
  • margaretclare
    Isn't it amazing - all these cautionary tales of what can happen, with real live examples as in Tim_L's good mate, and Bossyboots' former neighbour. I've heard this idea floated so many times - 'if we put the house into the children's names that will protect our assets from care costs/IHT'. It sounds such a simple idea doesn't it? But fraught with perils. I wish more people could read this thread. Just have a look at the AgeConcern and Help the Aged discussion boards and see how often this same topic comes up. The sort of examples quoted here should really be seen much more widely.

    I too am staggered at the things that people do in a DIY way, on the cheap, without proper advice.

    Best wishes

    Margaret
    r ic wisdom funde, r wear ic eald.
    Before I found wisdom, I became old.
  • LondonDiva
    There's also the assumption the the local authority will force you to move to pay for care. This is not the case, in most cases what they will do is have first dibs on money raised from the sale of the house when you die.
    "This is a forum - not a support group. We do not "owe" anyone unconditional acceptance of their opinions."
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