Inheritance protection over Care Home Fees?

astrobhoy

Hi all,

My parent's are currently making their will out, and have planned to leave the house to myself, 2 brothers and 1 sister. The house in it's present state is probably worth around £200,000 which is below the IHT threshold, but one thing that slightly concerns us is care home fees. My father has Parkinson's disease, and although at the moment is doing great thank god, it is possible that sometime in the future he may have to go into care. Obviously if you cannot pay for your care, then it is covered by NHS.

My question is , what is the best way to leave the estate, or even sign it over just now to avoid paying care home fees in the future?

Could they sign the estate over to my sister, or 'gift the estate to her?

There is no arguement over who gets what here, as my sister (49) currently still lives with my parent's. My brothers and parents and i have agreed that she should receive two fifths of the estate to help her buy a place.

Thanks

dunstonh

My question is , what is the best way to leave the estate, or even sign it over just now to avoid paying care home fees in the future?

You cant sign it over now. The Govt has got round that.

A discretionary will trust with the property changed to tenants in common is the easiest way. The Govt hasn't got round that one yet and its been tested a few times in court and they have lost each time (local authorities rather than central Govt.)

neilsjoseph

Your answer seems to be what im looking for, but could you explain further please?

EdInvestor

The ownership of the property is changed to "tenants in common", 50/ 50 each.Then each parent leaves his or her half in trust to the children. The trust arrangment protects the surviving parent's interest, so that s/he cannot be forced to leave the home after the first parent dies.

Assuming one parent goes into care leaving the other at home, the house would not be touched anyway while the other parent was still alive and in occupation. But if the first parent dies, and the surviving parent then goes into care, the trust arrangment means that the surviving parent only owns half the house. Since you cannot sell half a house, because no-one will buy it, the authorities have been unable to take the situation further in these cases.

merlinthehappypig

EdInvestor wrote: »

The ownership of the property is changed to "tenants in common", 50/ 50 each.Then each parent leaves his or her half in trust to the children. The trust arrangment protects the surviving parent's interest, so that s/he cannot be forced to leave the home after the first parent dies.

Assuming one parent goes into care leaving the other at home, the house would not be touched anyway while the other parent was still alive and in occupation. But if the first parent dies, and the surviving parent then goes into care, the trust arrangment means that the surviving parent only owns half the house. Since you cannot sell half a house, because no-one will buy it, the authorities have been unable to take the situation further in these cases.

I was under the impression that the local authority could still place some sort of attachment to the surviving parent's half of the house and claim back care fees when it was eventually sold.

Is that wrong?

sloughflint

Check out the information in this informative post and the quoted link within it for an explanation on what may be the best way forward.
DWTs are probably no longer necessary in a lot of cases.
Taken from this thread:
http://forums.moneysavingexpert.com/showthread.html?t=821931

sloughflint

neilsjoseph wrote: »

Your answer seems to be what im looking for, but could you explain further please?

Are you specifically looking for an explanation on DWTs as that is what Dunstonh mentioned?

I say this because I think Edinvestor might well be talking about the same type of Trust as I mentioned in my last post and not a DWT. The website link explains those types of Trusts ( can't remember the name) quite nicely as I recall.Far better than I could anyway.

If you are asking about DWTs however, I'm fairly confident that the house would still belong to the surviving spouse but a charge ( equitable?) is placed on the property. This means that only half the value of the property would be counted in the estate of the surviving spouse reducing potential IHT liability.

I think that both types of Trust are useful regarding the care home aspect ( half of property is safeguarded from fees, can't be forced to sell) but the one mentioned in the previous post is easier to manage and better for care fees now that the Nil rate bands have effectively doubled.
Hopefully others will confirm or correct me.
Do note that DWTs are not completely tax free.

sloughflint

merlinthehappypig wrote: »

I was under the impression that the local authority could still place some sort of attachment to the surviving parent's half of the house and claim back care fees when it was eventually sold.

Is that wrong?

I wasn't sure about this but I do remember reading this thread recently and if you home in on posts 6,7 and 8, it appears that the whole house is safeguarded:

http://forums.moneysavingexpert.com/showthread.html?t=862669

And yes, the whole house would also be protected from nursing fees.

Jake'sGran

Astrobhoy, we made out our wills early last year. When the first of us dies our daughter will own that half of the house. There is a condition in the will that the remaining spouse will have the benefit of remaining in the property until his/her death. When the second person dies our daughter will own all of the house. We made declarations making us "Tenants in common" some time ago. Our solicitor has confirmed that they have been done correctly and that the Land Registry does not need to be informed because of where we live and the date the house was built. We did not discuss Care Home fees with her so I assume it would not be a problem. Perhaps EdInvestor or Dunstohn can confirm that this is the case.

Fourcandles_3

My FIL had early onset of Alziemers in his 40's. After 10 years at home he spent his last 3 in a care home.

I don't know how it works, but my mil was initially under the impression upto half the house would be used to pay for his care. She is now under the impression this is not true to do it being overturned in court.

I don't know anymore, but it sounds incouraging if she is right.

sloughflint

neiljoseph, I've remembered a bit more about DWT's:

The surviving spouse does indeed own the whole house but the simplest Trust consists of a promise to repay the value of half the house ( hence a charge being placed and recorded at Land Registry).
The surviving spouse's half share of the property could still be counted from a funding point of view ( Was that what you were thinking of merlinthehappypig?)


But as was mentioned in the thread re Life Interest Wills http://forums.moneysavingexpert.com/....html?t=862669,

It is arguably better than the discretionary trust as it's not only IHT efficient, but it safeguards the entire home rather than just half of it.