Trust fund to avoid care home house loss?

Frozen_up_north

I recently had a sales pitch from a firm of solicitors specialising in trust funds set up to avoid the loss of your house and savings in the event of needing to move into a care home.

Any thoughts on the validity of this approach?

Mojisola

Frozen_up_north wrote: »

I recently had a sales pitch from a firm of solicitors specialising in trust funds set up to avoid the loss of your house and savings in the event of needing to move into a care home.

Any thoughts on the validity of this approach?

You'll make the firm of solicitors a lot of money.

https://www.bbc.co.uk/news/business-39589083

If you're one of the few who needs residential care, do you really want to end up in the cheapest available home which is where the council will put you?

Keep_pedalling

My thoughts would be to tell them to take a running jump. Firstly would you want to end up in a care home of your choice, or an over my dead body type of care home that is all the LA could afford to put you in? Secondly look up deliberate deprivation of assets.

dunstonh

If the trust is being drawn up to avoid the means test then it will automatically fail as intentional deprivation of assets allows the local authority to disregard the trust.

It has to be a "happy" coincidence. Such as the plan is to reduce the impact of IHT (estate planning).

Also, the number of people that end up on local authority care is very small in the scheme of things. People worry about this disproportionality. And to be honest, local authority care is something you would not wish on yourself.

Mojisola

If one of a couple needs residential care and the other will still be living in the house, its value is not counted in the financial assessment - something these rogue firms don't usually tell you.

If you are part of a couple and own property, there is a way to get a balance between funding any residential care and leaving some inheritance.

If the property is owned 50/50 as 'tenants in common', you can each leave your half of the place to someone other than your partner/spouse. You need a well-written will that gives your partner a life interest in the property and covers all the issues like maintenance and repairs and how things are handled if the surviving owner wants to move.

lisyloo

Lots of good points so far.
Bear in mind that many people never need residential care.
You can have up to 4 visits per day from carers and have meals delivered and these days we are pretty good at keeping people in their homes as long as possible.
In this case it’s your income that counts and you only have to pay if you have more than £300 per week income.

It sounds like deprivation of assets to me.

Also I would echo the point about the standard of homes.
If you leave it to the Local authority then make sure you have a valid LPA.
The LA wanted to split up our mum and dad to save money after 60 years of marriage.

Would your kids really want you in an awful home so they could keep your money?

I am currently paying £925 per week of my MIlLs money to a nice care home and we are all pretty happy about spending our inheritance on her care.

Keep_pedalling

If you are anywhere near IHT territory this would also be a very bad move. Sticking your home into a trust and staying put means this would be a gift with reservation so would stay in your estate for IHT purposes, but because you no longer own your own home your estate would no longer be able to claim the residents nil rate band which could result in addition IHT of £90k (£180k for a married couple).

The salesman won’t tell you about these downsides because all they want to do is earn a big fat fee by sowing fear about care costs.

pensionpawn

Mojisola wrote: »

If one of a couple needs residential care and the other will still be living in the house, its value is not counted in the financial assessment - something these rogue firms don't usually tell you.

If you are part of a couple and own property, there is a way to get a balance between funding any residential care and leaving some inheritance.

If the property is owned 50/50 as 'tenants in common', you can each leave your half of the place to someone other than your partner/spouse. You need a well-written will that gives your partner a life interest in the property and covers all the issues like maintenance and repairs and how things are handled if the surviving owner wants to move.

This means on first death 50% does not become part of the surviving person's estate and therefore only their own 50% of the property value can be assessed for any legitimate care costs. The important point here is that the 50% was never part of the survivors estate and therefore no avoidance has taken place.

Frozen_up_north

Thanks for all the useful info. I don’t trust sales people who pester you when out shopping.

I had no intention of taking the offer, but was curious about the whole setup.

LHW99

I don’t trust sales people who pester you when out shopping.

Or who phone you uninvited!

Keep_pedalling

Frozen_up_north wrote: »

Thanks for all the useful info. I don’t trust sales people who pester you when out shopping.

I had no intention of taking the offer, but was curious about the whole setup.

Solicitors are not allowed to tout for business like this, so they were definitely not solisitors.