Nursing care benefit and 'giving away' money

nearlyrich

It is possible to arrange your affairs to avoid paying for nursing care from the proceeds of the family home but it needs to be done well before the need for care arises. The best way to find out about these things is to consult a specialist advisor because a badly put together plan to avoid paying this or other "unfair" taxes like inheritance tax can end up costing a lot more than they save.

mary43

Where's the best place to go to for a 'specialist advisor' ? My husband and myself are considering transferring our home to our two sons with a clause to state that we can live in it for as long as is possible. Can I do this ? I read somewhere about a 7 year time span for this prior to either of us needing anyform of residential/nursing care.

EdInvestor

mary43 wrote: »

Where's the best place to go to for a 'specialist advisor' ? My husband and myself are considering transferring our home to our two sons with a clause to state that we can live in it for as long as is possible. Can I do this ? I read somewhere about a 7 year time span for this prior to either of us needing anyform of residential/nursing care.

This won't work: it will fall foul of the deprivation rules on care funding and also the IHT rules as a Gift with Reservation of Benefit. Also it will open your sons up to paying capital gains tax on the proceeds when the house is eventually sold.

If you are trying mainly to avoid IHT (house worth over 300k) what you need is a 'nil band discretionary trust', see a soliticitor or trust practitioner.
If care costs are the problem, if one spouse is still in the house, it won;t be taken to pay for the other's care, but it would be very sensible to change ownership of the house (if necessary) from joint tenants to tenants in common and divide your assets up equally in both names.


Particularly if nursing care is required, the Government will now contribute about 8,500 p.a towards the cost under new rules.The average cost is 30,000 a year. The average pension in the UK is now 14,000. So if the person needing care is single, it could well be that if you rent out the home, and add the rent money to the pension and the Government contribution, the care may be affordable, perhaps with a small care annuity top-up costing maybe 20,000 or less, without losing the ability to leave the house as an inheritance.

So not necessarily the bugbear that it may appear to be.More research into the facts of the matter may be worthwhile as there is a lot of incorrect gossip and scaremongering going on on this subject, which has now obviously become very political.

Biggles

EdInvestor wrote: »

Particularly if nursing care is required, the Government will now contribute about 8,500 p.a towards the cost under new rules.

What's that contribution, Ed? I know it's not the RNCC, the maximum's just dropped from £139pw to £101pw.

EdInvestor

Combination of the 101, which everyone will now get, plus full AA.

mary43

Thanks Edinvestor.
It's not IHT that I'm so worried about (house is nowhere near any amount like that). What I'm trying to do is safeguard our property (worst case scenario.......me and hubby both end up in care homes for whatever reason, )my son's inheritance is secure.
Wasn't sure whether to see a solicitor about this or who would be best. Surely something can be done.

Biggles

mary43 wrote: »

Thanks Edinvestor.
It's not IHT that I'm so worried about (house is nowhere near any amount like that). What I'm trying to do is safeguard our property (worst case scenario.......me and hubby both end up in care homes for whatever reason, )my son's inheritance is secure.

I think when the time comes for me to go into a care home, I'll be glad I've got the funds from my house sale so that I can go into a care home I like rather than whatever one the local council decides to stick me in.

I'm sure our children will agree - my mother's children certainly thought that way, fortunately for her - and (properly managed and with an immediate care needs annuity to plug the income/expenditure gap) her remaining funds will not only last her out but actually increase over time.

You and your husband are the priority now. To give your home away will only reduce your options and, as you don't know what life holds for any of you, may not even end up helping your son a great deal.

margaretclare

Biggles wrote: »

I think when the time comes for me to go into a care home, I'll be glad I've got the funds from my house sale so that I can go into a care home I like rather than whatever one the local council decides to stick me in.

NB: This is likely to be the cheapest possible and may not be where you want i.e. may be miles away from your friends and family. I used to do shifts in a home which had beautiful open views across fields, and most of the residents were from inner London, whose preferred views were shops, buses and cinemas! They were 40 miles from where they'd lived all their lives.

I'm sure our children will agree - my mother's children certainly thought that way, fortunately for her - and (properly managed and with an immediate care needs annuity to plug the income/expenditure gap) her remaining funds will not only last her out but actually increase over time.

You and your husband are the priority now. To give your home away will only reduce your options and, as you don't know what life holds for any of you, may not even end up helping your sons a great deal.

I completely agree with all of this.

There are two completely different and opposing schools of thought.

One is as outlined above by Biggles, and it's my and DH's way of thinking too. We don't waste mental energy on 'if I/we have to go into care'. We're too busy living and enjoying life to spend time worrying about what may never happen. If such a thing ever does happen, if one of us is left on his/her own and needs long-term care, then thank goodness there is some equity in this little property which can be put to good use. After all, if the survivor is living in care then he/she won't need this house to live in!

The other school of thought believes that 'the state should pay' (for 'state' read 'taxpayer') for long-term residential care, and that assets, including a house, are an 'inheritance' as of right for the next generation. This appears to be what Mary is worried about. I can't express strongly enough how much I disagree with this point of view - but it is one that rears its head time and again.

Margaret

Errata

The other school of thought believes that 'the state should pay' (for 'state' read 'taxpayer') for long-term residential care, and that assets, including a house, are an 'inheritance' as of right for the next generation. This appears to be what Mary is worried about. I can't express strongly enough how much I disagree with this point of view - but it is one that rears its head time and again

It's a conundrum that's never been faced by previous generations.
There will always be a finite amount of state money available for the care of those older people who need it. The difficulty is that if people find legal ways and means of avoiding any contribution to their own residential care there will be far, far less cash available for a care package to enable people to continue to live in their own home. Leaving them no alternative but to fund the care package themselves, and they may have no liquid assets to do this, or move into residential care.
I really struggle to figure out how all this will end, with people increasingly living longer and great age often accompanied by fragility and expensive to support health problems. But so does the government !

margaretclare

Have a look:

http://news.independent.co.uk/uk/politics/article3047625.ece

Margaret