Nursing Care for Parents/Sell Their House?

raveydavey_2

I'm concerned, as are many, that if my parents end up needing nursing care I will end up having to 'give' their house to the government to pay for their care. My dad is particularly concerned about this. He worked hard to pay off the mortgage and it's really all he has to leave to us.

I think there are solutions but I'm not convinced that organising a trust is the answer. I think the government could move the goalposts on this one.

I think the best solution is to let the house to tenants to pay for their care, by passing the social services alltogther. Not for everybody I know. I'd be interested in your comments.

Check out the Panorama programme on this topic.
http://news.bbc.co.uk/1/hi/programmes/panorama/5188580.stm

Regards
Davey

seven-day-weekend

Good idea providing it will raise enough money to pay care home fees after payment of tax.

A way I thought of, was to mortgage the home, use this money to pay the care home bills and then rent the proerty so that the tenant's rent will cover the mortgage. Balance of mortgage money will be earning interest in a high-interest account.

EdInvestor

First of all it should be noted that very very few people actually have to go into care homes, and those who do tend to be very old indeed and on their own. The vast majority are quite OK at home, and there is plenty of help available at reasonable cost to keep them that way these days.

But one useful way to fund care if it does arise is an immediate needs annuity. If the money is paid directly to the care home,it is not taxed.

If the house does have to be sold to buy one of these, there will usually be a decent chunk left over for the kids - and everyone has the peace of mind that the care is paid for, no nasty surprises, and in many cases, without any control by the council.

dunstonh

Another way is to place investments into an investment bond. As these are classed as life assurance, they cannot be included as an asset on the means test. Meaning that someone with £500k in an investment bond and £30k in the bank would have only £30k on the savings/investments part of the means test.

This cannot happen after the event though as it is too late then. It would have to occur at least 6 months before an indication that local authority care is going to be required.

EdInvestor

There has been an important development recently in this area affecting married couples. No longer can the council raid one spouse's assets to pay for the other person's care.So older people should hold all their assets separately from now on.

Of course the house is excluded from being counted as long as one spouse ( or a child over 60 IIRC) is still living in it.

http://www.thisismoney.co.uk/retirement/article.html?in_article_id=407181&in_page_id=6

margaretclare

EdInvestor wrote:

There has been an important development recently in this area affecting married couples. No longer can the council raid one spouse's assets to pay for the other person's care.So older people should hold all their assets separately from now on.

Of course the house is excluded from being counted as long as one spouse ( or a child over 60 IIRC) is still living in it.

http://www.thisismoney.co.uk/retirement/article.html?in_article_id=407181&in_page_id=6

We are not worried about the possibility of going into care - as Ed says this affects a minority of older people, and we take the view that there's no point in worrying about something which may never happen. However, the OP does say that he's worried about this possibility 'as are many'. I think this is one of those urban legends which have got about - that the Govt will 'grab' your home and force you to pay for care. I don't doubt that it happens, but I would doubt that it is an 'inevitable' which will happen in all cases. The only certain things in life are death and taxes - having to go into a care home is NOT certain.

Having said that, we do keep our incomes and savings separate and we also use a joint account only for household bills. This seems a good way of going about things. As each individual has an ISA allowance it makes no sense to have savings held in joint names - why not make use of each person's ISA allowance first?

Margaret

EdInvestor

Indeed you seem to be right about this Margaret.The whole issue also seems to be entangled with urban legend No 2 - if the Government doesn't grab your house to pay for a care home, it will take it through inheritance tax.

Yet only 6% of estates pay IHT, which is hardly surprising because the value of the average UK home is under the IHT nil rate band, and there is no IHT charged when assets are left to spouses.

ReportInvestor

dunstonh wrote:

Another way is to place investments into an investment bond.

It usually is .

dunstonh wrote:

someone with £500k in an investment bond and £30k in the bank would have only £30k on the savings/investments part of the means test.

That's so ridiculous.

If you had a referendum on the subject this loophole would be closed overnight.

Talk about taxation being designed to benefit the rich (and the insurance industry / IFAs ).

Paul_Herring

dunstonh wrote:

This cannot happen after the event though as it is too late then. It would have to occur at least 6 months before an indication that local authority care is going to be required.

They can treat it as if you still had it though, if the main reason for acquiring the bond was to remove it from the means test. Same applies for 'gifts' to (e.g.) your children to bring down your assets for means testing.

And they can go back longer than the usual 7 years.

I've had this fight when my mum went into care, and they tried taking the house she was living in of which I own half. (I don't live there at the moment, but it's the only property in which I have any assets.)

ReportInvestor wrote:

dunstonh wrote:

someone with £500k in an investment bond and £30k in the bank would have only £30k on the savings/investments part of the means test.

That's so ridiculous.

If you had a referendum on the subject this loophole would be closed overnight.

Depends on if the bond was acquired as a genuine investment, or to avoid it being classed as assets. If the latter was suspected and found to be true, it would no longer be excluded.

dunstonh

You are correct. For example, on my suitability report and factfinds I couldnt make any mention of the investment being done to avoid reduce pension credits/local authority means testing etc. It has to be totally investment focused.