Putting home into family trust to avoid nursing home fees

Mojisola

lessonlearned wrote: »

Even so, it's still a ridiculous post code lottery. If you live North of the border And need care you are not robbed blind.

Scotland has found a way to a fairer charging system. Why can't we.

This doesn't look that different to England and Wales -
http://www.careinfoscotland.co.uk/how-do-i-pay-for-care/paying-care-home-fees/capital-limits.aspx

lessonlearned

This is always going to,be a contentious issue, whichever way you look at it. And I'm not going to get into an argument about who should pay for what.

My point is that most of us younger retirees have had some time to realise what is happening and thus try and make provision. Some of that older co-Hort didn't. Many of them are utterly bemused by the complexity of the system.

I have no axe to grind either way. I am more than happy to see my parents home fund their care, well dads anyway, mum died last week. I want to see him happy and comfortable. I don't need an inheritance.

We all know that to expect free care is totally impractical. And I'm not suggesting that for one minute.

However I dont think it is unreasonable to suggest that the current system needs a good shake down.

It cannot be right that some people can spend the lot and then expect the State to pick up the tab.

As for the WWII co-hort. Well I still think we owe them a measure of gratitude and penny pinching doesn't seem to fit right in my books.

I worked with a man who had been a captive on the Burma Railway, my dads own war time experiences are enough to make a grown man weep.

I just think they deserve a bit more generosity than we sometimes show them.

Torry_Quine

Mojisola wrote: »

This doesn't look that different to England and Wales -
http://www.careinfoscotland.co.uk/how-do-i-pay-for-care/paying-care-home-fees/capital-limits.aspx

You're right, it really isn't different as people still pay large sums and sell homes to pay for care.

pollypenny

Mojisola wrote: »

My parents were from this generation. They worked hard and saved, even though they didn't earn a great deal. They also benefited from the extraordinary rise in house prices over the years.

The unearned money from the sale of their house meant that I could chose which home Dad spent his last months in. His money was spent on him until he didn't need it any more.

Ditto. My father was the same, self-funding from pension and AA, with capital making up the rest. If it all went to keep him, so be it.

LL, I really don't think people deliberately squander their assets in order to get free care. Many have worked on low paying jobs and have little.

bondy_lad

lessonlearned wrote: »

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.

what a superb posts,thank you for taking the time to write this,i wish you a long and healthy life,nothing else needs to be said,you said it all in your post,not only that 100% correct in everything you say.

SevenOfNine

Doc_N wrote: »

Trying to use trusts to safeguard the money is unlikely to work because of the deprivation of assets rules that local authorities will invariably apply now.

Don't know why you keep repeating the 'deprivation of assets' comment. The trust many are referring to has no deprivation of assets whilst the person is ALIVE, so would not be discounted by the LA.

The assets drop into the trust on DEATH, instead of passing directly to the surviving spouse, thereby protecting those assets from being utilised by the LA should the surviving spouse need a care home in due course (& protecting our sons from survivor forgetting to write a new Will if remarries, or pi $$ !ng everything up the wall eventually leaving nowt whatsoever for our sons to inherit).

Spouse & sons are trustees so will agree to dispose of the assets how & when they see fit. Yes, an element of 'trust' is required - that's what families should be about.

Doc_N

SevenOfNine wrote: »

Don't know why you keep repeating the 'deprivation of assets' comment. The trust many are referring to has no deprivation of assets whilst the person is ALIVE, so would not be discounted by the LA.

The assets drop into the trust on DEATH, instead of passing directly to the surviving spouse, thereby protecting those assets from being utilised by the LA should the surviving spouse need a care home in due course (& protecting our sons from survivor forgetting to write a new Will if remarries, or pi $$ !ng everything up the wall eventually leaving nowt whatsoever for our sons to inherit).

Spouse & sons are trustees so will agree to dispose of the assets how & when they see fit. Yes, an element of 'trust' is required - that's what families should be about.

Not so sure about the 'keep repeating' deprivation of assets - I've mentioned it twice!

And it's highly relevant for anyone planning to give money away or put money into trust during his/her lifetime. There are any number of 'advisors' out there selling so-called avoidance schemes which simply won't work for this reason.

However, I entirely agree with you that it's possible to use tenancies in common and trusts to protect some of the assets when they would otherwise pass into the hands of the surviving spouse.

Keep_pedalling

The truth of the matter is that if we want the cost of all us old codgers to be looked after when our physical and mental faculties start to fail to fall on the state regardless of our net worth then the younger generations are going to have to be taxed to the hilt which hardly seems fair. None of us have paid enough into the system to support us in long term care so it if fairer that those with significant assets (although I think this should be more than £23k) contribute to their own care.

The vast majority people in their 80s and 90s with little assets and getting free care were not spendthrift work-shy wasters they worked hard in low paid jobs or they left work to bring up children.

My step father spent the last 9 months of his life in a nice care home funded by the LA, he was an retired agricultural labourer living on just the state pension, lived frugally an had few savings.

My mum is also receiving care at home paid for by the LA, she is twice widowed (my father died young) and people of her generation did not get back into work (at least not well paid work) after having kids. She has savings but they are under £23K so if she has to go into full time care she will only have to contribute her pension payments (although am willing to top the fees up if that means she gets better care)

When it comes to our turn it is going to be very different. We own our own house which is worth 10 times more than we put into it and we have significant savings. We don't intend to take any action to avoid self funding, it is our money if necessary will use a good chunk of it to fund the best care we can get. As it stands currently for every £100k we spend on our care our estate's IHT bill goes down £40k so every cloud has a silver lining.

pollypenny

Excellent post, keep pedalling!

Being financial pessimists, we now have decent savings and pensions and are able to enjoy life, without being wasteful.

Weve helped the kids and will still do so if needed. However, if care was needed we would expect to pay for it, even if there's nothing left for an inheritance.

[Deleted User]

KP and PP, your posts both resonate with me and I help my children when I see a need, however I am geared up to pay for my own way if care is needed. I abhor the fact that so many baby boomers and I am a baby boomer, expect the younger generation to pay for their care when many baby boomers in reality do have the chance to cash in on the extreme rise in house values.

I would not rest easy if I had placed this and that in trust or given assets away or did what I know some people did and that is get an equity release several years ago, which means that most of the house is now in hock to a loan company, having spent the proceeds on foreign holidays, new car or a cruise, I know people who have done that

If I need care then I want platinum standard care and so I continue to have a comfortable life but minus cruises and expensive foreign property or flash holidays. If I pop my clogs before I need care then I pass on knowing that I give my children and grandchildren a financial boost and also having set a good example to them