To put a property in "Trust."

Errata

I think the difficulty with this discussion is that it touches on peoples' ethics, morals, rights and responsibilities - quite a potent mix.
I have a great deal of sympathy for those who have worked hard, bought a property, and see its value being used to fund their care when they need it.
However the fact that just now someone's property may be worth a quarter of a million rather than £2.5k is not the result of their hard work but luck and market forces.
I and my sibling have 'lost' much of our 'inheritance' as my parents property was sold to fund necessary residential care for both of them. That bothers neither of us, as we were both raised to be self reliant, responsible adults and in any case the parents were quite at liberty to leave everything to the cats home - their assets, their choice.
A person's home can be sold without their consent if they need residential care and don't have capacity. For instance: partner 1 drops dead of a heart attack leaving everything to partner 2 who then develops dementia and is unable to make an informed decision about needing residential care.

I hope our discussion has helped the OP with information enabling them to think things through and shown them there are a great many options.
Discussion about racism is uncalled for, unecessary and adds nothing to the debate or helps the OP in any way.

missile

The Barnett Formula


Following the 1979 needs assessment, the then Chief Secretary to the Treasury, Joel Barnett, devised a formula which ensured that any future changes in the Scottish or Welsh budgets should be calculated as a proportion of the changes in equivalent English spending. The formula allocated increases or decreases in public expenditure to Scotland, Wales and England in proportion to their relative shares of GB population in 1976. This became known as the ‘Barnett formula’: it means that English spending levels drive the territorial budgets.

The formula is applied to calculate the ‘Scottish Block’. This is the part of the Scottish Secretary’s total budget which is allocated by reference to English equivalent spending rather than independently. It excludes programmes like agriculture, fisheries and food where there is a requirement for a standard policy across Britain. Over the years the composition of the Scottish block has steadily expanded. The block accounted for 97% of spending within the Scottish Secretary’s responsibility in 1994-95.

The Barnett formula is frequently misrepresented today as a means of maintaining Scotland’s relatively generous financial settlement. Yet in fact the effect of the formula in theory is to bring about convergence over time between spending in Scotland, Wales and England. Since the formula applies only to changes in spending, if population shares remain constant the effect of the formula is to reduce spending in Scotland and Wales as a proportion of English spending. The historical base - that quantum of spending in Scotland and Wales to which the changes apply - should slowly assume less importance in the overall budget.

PS: The Barnett Formula works in an analogous way in Northern Ireland.

[Deleted User]

The topic does make a lot of people hot under the collar but I wonder if everyone has thought this through properly. I know Margaret has and so have I and my DH. We will retain full control of all our assets to do with as we wish. We are only just 60 and could well have 35 or so years ahead

Wills and enduring power of attorney should come before discussing trusts and ring-fencing capital for heirs. Epa`s change to become lasting power of attorney in october 2007. An epa only needs to be registered on an as-needed basis so is very worth having. A lasting power of attorney is registered straight away

Margaret, as always, has hit the nail on the head when she speaks about saving for future needs such as cleaning and gardening etc all of which will enable her and her dh to stay in the home they have built up together. We save up too but seeing this in black and white has made me doubly determined. Who on earth wants to be in a second-rate care home when we could, with help, stay in our own homes

Our children will get legal handouts along the road and for example, I know we will be getting a bit of a windfall soon and we will each use our £3000 allowance for this year, to give our 3 children £2000 each. I know that they will value the gift greatly. There will be stipulations ie they will be able to chooose from a list such as: new boiler, double glazing, sum taken off the mortgage etc

No-one in my family is thinking IHT. It would be extremely rare for both of us to die suddenly together. A trust is a no no as far as we are concerned

Gosh this is an endless topic. The thing that struck me this week concerns the fact that housing in Spain is slumping in value. We have a neighbour who is affected. It seems that no-one should be counting their chickens wrt property. I am sure that we haven`t seen the end of nasty government surprises re IHT and trusts

Errata

Kittie, thanks for bringing up the importance of power of attorney. I arranged mine some time ago. No guarantee that some petrolhead won't smash into my car and leave me brain damaged. Worst case scenario but not to be dismissed out of hand.

margaretclare

kittie wrote: »

The topic does make a lot of people hot under the collar but I wonder if everyone has thought this through properly. I know Margaret has and so have I and my DH. We will retain full control of all our assets to do with as we wish. We are only just 60 and could well have 35 or so years ahead

Wills and enduring power of attorney should come before discussing trusts and ring-fencing capital for heirs. Epa`s change to become lasting power of attorney in october 2007. An epa only needs to be registered on an as-needed basis so is very worth having. A lasting power of attorney is registered straight away

Margaret, as always, has hit the nail on the head when she speaks about saving for future needs such as cleaning and gardening etc all of which will enable her and her dh to stay in the home they have built up together. We save up too but seeing this in black and white has made me doubly determined. Who on earth wants to be in a second-rate care home when we could, with help, stay in our own homes

Thank you very much for the kind words, Kittie. Yes, when people say to me 'what on earth are you saving FOR at your age, why not blow the lot, the state will look after you etc etc' it's difficult to come up with an answer that will cause a dent in that kind of thinking. My usual answer is, truthfully, that we could have another 20 years in front of us and we simply do not know what our wants and needs may be in that time, and still less do we know what kind of changes are on the horizon. I would a darned sight sooner pay for any services to come in than to go - voluntarily as the OP was planning - into any kind of care home.

We have done our wills, we re-did them after my younger daughter died at the end of 2002 and when we did equity release in 2003, that was when we had the title to the property changed from my name alone to joint tenancy. And yes, this question of JT vs TIC has been discussed exhaustively in another thread, and we have our reasons why we did it that way and why we're happy with it. Willman Rodders pointed out in that thread the difficulties with stepchildren and step-grandchildren. If we had both written into our wills: 'I bequeath to my grandchildren' without naming them, only the biological Gchildren of each of us would inherit. We've had to name them all and add their addresses, keep the addresses up-to-date with the solicitor. DH has 2 grandchildren and 3 step-grandchildren, I have 3 grandchildren and 2 step-grandchildren, they're all named in our wills, and that's the way we want it to be.

Power of attorney is more problematic. It's an idea that DH absolutely will not countenance. It's difficult because of distance anyway. All our relatives are a looooong way off - Liverpool, Leeds, Derby and Market Harborough (that's his daughter, the closest, and she's 100+ miles away). What we have done, however, is to set up our affairs so that everything could run automatically for a considerable length of time. Incomes arrive electronically into our bank accounts and money is transferred out by the same method. There should be no question of bills not getting paid because pensions can't be accessed in cash and money paid physically for utilities, council tax etc. It all happens without our having to give it a single thought. We've done this deliberately. I've seen harrowing examples. 'Mum always draws her pension weekly in cash, she's had a stroke, her bills still need paying and no one can get at her money'. This won't happen with us. As long as we're alive our income will keep coming in and essentials will still get paid for.

One thing I've thought of just now - I'll get more house keys cut and give to my daughter and his daughter, just in case they ever have to come down here, if the worst came to the worst. No point in having all important documents, copy wills, lists of bank accounts etc in a safe place if no one can get in.

It really does have to be thought through most carefully, as Kittie says. No good going off into a rant about 'houses being stolen from us' etc - it's necessary to think about it carefully and do what is possible.

It is certainly true that many of us did not 'work for' the huge and unexpected increases in our net worth that have come about in recent years. We worked hard to keep a roof over our head - I certainly did in the early 1990s following widowhood and redundancy when I turned my hand to all kinds of jobs - but no one could have foreseen that house property would jump by £100K. No one worked for that!

Another point for younger people is - please do take out life assurance if there is someone who would be the poorer by your death. This was something my first husband refused to do when he was a young family man - he 'didn't believe in it'. Once he'd had a coronary aged 38 it was too late. I needn't have been left with a mortgage to pay and no income in 1992 if he'd taken that simple step at a time when it would have been cheap and easy for him to do.

Margaret

[Deleted User]

just a quickie: re enduring power of attorney. A husband/partner can be attorney for the wife/partner and vice versa. You only need two attorneys if the house is in two names because two signatures will be needed. ie nothing can be done re the house without the say so of the husband/partner anyway. Joint attorney like this can be problematic because either one or the other can act in other situations ie if one of the couple had a stroke. However the document can be kept in the possession of the survivor so it is safeguarded. Our document was made via the 10 minute will site and is kept in a file here at home. It was only done so that it could be raised if ever needed. I hope never
http://www.tenminutewill.co.uk/main.cgi

Life, or rather provision for future problems, is so complicated. No wonder most people do nothing

margaretclare

Thank you for this, Kittie. I had not realised that a husband and wife can do this for each other. I'll certainly do what you suggest, and the link above is most helpful.

Re my post above, I found a spare set of keys and we have hidden one in the shed outside (it really is well hidden because of opportunist burglars) but I have emailed family members telling them where to look for it.

Best wishes

Margaret

Errata

I kept my spare keys in the shed in case I somehow lost my set whilst I was out. Easy, I thought, lose keys - get taxi home - borrow neighbours wrecking bar - break into shed - let myself into the house - get shed lock fixed!
My friend pointed out the coincidence of me losing my keys and shed burning down, on bonfire night! They're now buried in the garden in a Tupperware box.

treacletoffee_2

Be very careful about signing your home over to your children. I have recently worked on a case where a lady did just that, and several years later her daughter refused to allow her to remain living in the house! The lady was effectively homeless and ended up in residential care.

Believe me, it does happen, so Beware!!

margaretclare

Thank you for this, treacletoffee. I think this post should also appear in other threads e.g. saving tax, mortgages, retirement planning, because this idea is very very common and the question does get asked time and time again.

Margaret