Putting home into family trust to avoid nursing home fees

Igotothefootofourstairs

Pollycat wrote: »

Yep, noisysaver may have given the OP the answer he was looking for - albeit a little late as the first post was dated over 3 years ago and the OP hasn't logged back onto MSE since Jan 2012.

OK fair comment perhaps they have answered other peoples concerns too.

https://www.moneyadviceservice.org.uk/en/articles/are-you-eligible-for-nhs-continuing-care-funding

Doc_N

Pollycat wrote: »

Yep, noisysaver may have given the OP the answer he was looking for - albeit a little late as the first post was dated over 3 years ago and the OP hasn't logged back onto MSE since Jan 2012.

Just a shame that the 'answer' is incorrect, highly misleading, and could cause people to lose substantial amounts of money.

Pollycat

Igotothefootofourstairs wrote: »

OK fair comment perhaps they have answered other peoples concerns too.

https://www.moneyadviceservice.org.uk/en/articles/are-you-eligible-for-nhs-continuing-care-funding

Or maybe not......

Doc_N wrote: »

Just a shame that the 'answer' is incorrect, highly misleading, and could cause people to lose substantial amounts of money.

onlygoingforward

"The concept of deliberate deprivation of assets
in relation to financial assessment refers to where a
person has intentionally deprived themselves of
or decreased their overall assets in order to reduce the amount they are charged towards their local
authority arranged care.

People’s ability to spend their income and assets as
they see fit can be important for promoting their wellbeing and enabling them to live fulfilling and independent lives.

However, it is also important that people pay their fair contribution towards their care and support costs and there may be cases where a person has deliberately tried to
avoid care and support costs through depriving themselves of assets – either capital or income.

In such cases, the local authority may either charge the person as if they still possessed the asset or, if the asset has been transferred to someone else, seek to recover the lost income from charges from that person. However, the local
authority cannot recover more than the person gained from the transfer.

A person can deprive themselves of capital in many ways, but common approaches are:

a lump sum payment to someone else, for example as a gift or torepay a debt of their own or the person
substantial one-off expenditure has been incurred

the title deeds of a property have been transferred to someone else

assets have been put in to a trust that cannot be revoked"

http://www.skillsforcare.org.uk/Document-library/Standards/Care-Act/learning-and-development/financial-assessment-and-charging/deprivation-of-assets-handout.pdf

So still deprivation under the new care act trust or no trust its all about intent.

downshifter98

Mum died a year ago. 5 years before she died she sat me down and announced we had to make some changes; Mum and Dads house was totally in Dads name so over the following year we changed ownership to tenants- in-common 50% each parent and then rewrote mum and dads wills so that their half of the house was left, in trust, to their children and grand children (with their 2 children as trustees). The trust exists as soon as the will is acted upon. So now Dad lives in the house for as long as he needs it but the maximum that can ever be taken by the state is 50% (and I believe even that might be difficult to achieve if the trustees refuse to sell their 50%). Mum was a clever old stick. The only small catch is that any 'profit' made on the future sale of the trustees 50% of the property is subject to cgt but I see it as a bird in the hand being worth 2 in the bush.

As an aside we were told not to mention to solicitors that any of this was to avoid possible care home fees (Mum was already seriously disabled when this was done but not, at the time, in need of care) so we merely kept to the facts.

I should also add that the main motivation was with Dad 5 years older Mum thought that she might need immediate care if Dad died first and she felt that half to the state (for her care) was enough. As they say 'man plans and God laughs...'

Hope that helps anyone in a similar situation.

pollypenny

What's this 'taken by the state'? We are not in a communist country.

We also have a trust, but if the survivor needs to use the value of the house he or she can do. If either of us dies need care, we will be able to pay for a place of our choice, which your dad may not be able to do.

The trust ensures that if either of us dies, the second cannot remarry and disinherit our children.

downshifter98

pollypenny wrote: »

What's this 'taken by the state'? We are not in a communist country.

We also have a trust, but if the survivor needs to use the value of the house he or she can do. If either of us dies need care, we will be able to pay for a place of our choice, which your dad may not be able to do.

The trust ensures that if either of us dies, the second cannot remarry and disinherit our children.

Just a phrase but you get the general gist.

Dad has complete use of the full value of the house for as long as it's required and can still move if he wishes.

A trust has to be based on trust, of course. So if Dad insists that he uses the full value of the house to pay for any care (he is currently in fine health) then we will do that. More likely is that he uses his half of the house until exhausted and then the trustees pay any 'top ups' to enable him to stay in his preferred care home. But, as I've said, this was mainly done from mum's point of view and I think it's a good compromise (remember the 'state' will still get cgt on the trustees half of the house so if dad never needs care the 'state' actually wins out of this - all of life is a gamble!).

lessonlearned

We may not live in a communist country and whilst the State does not actually seize assets as in the phrase "taken by the State" I think the meaning of downshifters comment is well understood.

When my husband was ill and we could not get adequate funding I was forced to sell assets at fire sale prices in order to survive.

Ok the State did not actually seize them but the net result was the same. We lost everything that we had spent a lifetime building and I was left staring bankruptcy in the face - hence joining MSE in order to survive.

I have fought back and now that my finances are back on an even keel I have done all that I can legally do to protect ehat I have left.

Rather than run the risk of the State taking the bulk of my savings and assets I have gifted my children some money now. I am 63 and in rude good health, so with a bit of luck I will not fall foul of any rules or time constraints.

With a bit of luck and a fair wind I should not need care for at least 20 years.

I have downsized and will be buying a smaller property which all in good time can be used to fund any future Care needs. The equity in my new home should be more than adequate whilst at the same time I have at least been able to ring fence enough money to help my sons.

I see no shame in using legal means to protect assets. The rich have done this for centuries, it's only during the last few decades that the average working person has had the means to build up assets. In most cases it is the family home which is the principal asset.

It is understandable that after a lifetime of hard work parents want to pass something of monetary value to the next generation. They might not be able to hand down everything but they should be able to protect a portion.

However, The State should not be able to grab the lot. (Yes I'm aware that they leave a small amount - I think it's around £23k).

Most "ordinary" people have little or no understanding of trusts. They are complicated and most of us need expert guidance.

There is a balancing act. One the one hand we need to think about not overburdening the State with our care needs but on the other hand the individual should not be overburdened by the financial impact of care home fees.

Currently we have the ludicrous situation where some people are receiving care without having to make a penny in contributions whereas the resident in the next room is paying the full amount.

And it's even worse than that.

Because State funding is so low and because they "bulk buy" places the amount paid by the self funding resident also subsidises the State funded resident.

The self funding resident or their family is therefore hit by a double whammy, paying not only their own fees but also making up the shortfall.

Of course we should pay our way but the system as it stands is grossly unfair and is in need of a good shake down.

Mojisola

downshifter98 wrote: »

So now Dad lives in the house for as long as he needs it but the maximum that can ever be taken by the state is 50% (and I believe even that might be difficult to achieve if the trustees refuse to sell their 50%).

This isn't a problem for the council. They will set up a deferred payment scheme where they pay the weekly costs and put a charge on the house. They will reclaim the debt when the house is eventually sold.

Errata

Mojisola wrote: »

This isn't a problem for the council. They will set up a deferred payment scheme where they pay the weekly costs and put a charge on the house. They will reclaim the debt when the house is eventually sold.

Cash strapped councils, which is all of them, are increasingly looking at doing this.
See Section 2. https://www.gov.uk/government/publications/care-and-support-whats-changing/care-and-support-whats-changing