Creating a Trust

PierremontQuaker03

Hi, both my parents are in their 70's and own there house which is worth around 250k.
I have one brother and one sister.
Obviously my main concern is that at some point they go into a home or require care and the Government will want the house.
What is the best way, as it stands to avoid this. Speaking to someone at work, they said the best way of removing them as owners of the house is to put it into a trust, which myself my brother and my sister can be trustees.  Is this the right way of doing it?
I want to be 100% certain of what the best way forward is before approaching this difficult conversation with my parents.
Thanks for any comments.

JGB1955

Is there a reason why your parents think they should't pay for their own care?  If they become tenants in common rather than joint tenants, 50% of the property will be safe from the scenario they are trying to avoid.

PierremontQuaker03

JGB1955 said:

Is there a reason why your parents think they should't pay for their own care?  If they become tenants in common rather than joint tenants, 50% of the property will be safe from the scenario they are trying to avoid.

maybe because they have worked their whole lives and want to leave their money it to their children, rather than the greedy care home owners ??

JGB1955

PierremontQuaker03 said:

JGB1955 said:

Is there a reason why your parents think they should't pay for their own care?  If they become tenants in common rather than joint tenants, 50% of the property will be safe from the scenario they are trying to avoid.

maybe because they have worked their whole lives and want to leave their money it to their children, rather than the greedy care home owners ??

I don't think you'll get much sympathy on this board..nor from the general public/tax payers.....but happy to be proved otherwise...

SevenOfNine

Why is it a "difficult conversation", surely it will be easy if what they want, what they plan, is for the 3 of you to investigate ways to remove their home from the risk of it being sold to pay for the possibility of a care home in the future.

Of course, the safest way would be no need for a care home because 1 or all 3 of you will be happy to provide all the care they may need when/if the time comes. Any chance of that?

We own our home as tenants in common, 50% each. Loosely speaking, at some point (67 & 73) we MAY decide to revise our will & leave our half in trust to our son, with the surviving spouse the right to remain in it until death (right to sell & all the other things a good solicitor will specify).

It won't be a difficult conversation in our case, because it's not a suggestion that will come from our son, we worked hard for what we have, if it all goes to provide good quality care when we need it, so be it.  EXACTLY as I viewed my late mum's home, as hers in case she needed the equity from it, not me & my siblings possible inheritance.

Keep_pedalling

PierremontQuaker03 said:

JGB1955 said:

Is there a reason why your parents think they should't pay for their own care?  If they become tenants in common rather than joint tenants, 50% of the property will be safe from the scenario they are trying to avoid.

maybe because they have worked their whole lives and want to leave their money it to their children, rather than the greedy care home owners ??

You are right that there is greed involved here but it’s not coming from some future care home.

There is no way to protect the house from care costs, although there is a way to protect half of it through setting up life interest trusts in their wills, although that won’t work in the unlikely case of them both needing residential care at the same time.

Savvy_Sue

Try to look on that house as their investment / insurance plan. If in the future they need residential care and are no longer able to live at home, use it to make sure they get the best possible care, in a home of their choice (or yours, if they can no longer make such choices). 

Alternatively, prepare yourselves for the possibility of providing 24/7 care to your parents, either in your home or theirs, between the three of you - assuming any of you have suitably accessible properties. 

Or look at what it would cost to provide 24/7 care from paid carers in their own home. 

Then see if you think what care homes charge is so unreasonable. 

Marcon

PierremontQuaker03 said:

Hi, both my parents are in their 70's and own there house which is worth around 250k.
I have one brother and one sister.
Obviously my main concern is that at some point they go into a home or require care and the Government will want the house.
What is the best way, as it stands to avoid this. Speaking to someone at work, they said the best way of removing them as owners of the house is to put it into a trust, which myself my brother and my sister can be trustees.  Is this the right way of doing it?
I want to be 100% certain of what the best way forward is before approaching this difficult conversation with my parents.
Thanks for any comments.

Some firms make a lot of money selling schemes to protect the value of a home from the means test, and claim that tens of thousands of people are forced to sell their homes to pay for care. This is not true, though of course some do. The schemes are usually sold at meetings in hotels and other venues to crowds of anxious people in their sixties and seventies.

These schemes cost thousands, even though they probably will not work. They are based on putting your home into a trust – a legal device so the property is owned not by you but by the trust. The theory is that, as you no longer own your home, it will escape being counted as an asset when the means test is applied.

However, this wheeze is defeated by a rule called ‘deliberate deprivation of assets’. If you take any steps to get rid of what you own, and part of your motivation is to increase your entitlement to help from public funds, then the asset can still be counted as yours. In other words, even if your home is owned by a trust, the local council could count it as if it is yours and refuse to pay your care-home fees. Buying a scheme of this sort is money down the drain – or rather commission into the pocket of the person who sold it to you. The firms selling these schemes are unregulated and there is no one to go to should you wish to make a complaint.

Most people who buy such a scheme will never find out whether it works or not. The great majority of people do not go into a care home. They die in their own home or in hospital.

Source: https://www.saga.co.uk/magazine/money/personal-finance/care/paul-lewis-paying-for-care

PierremontQuaker03

Wow some amazing judgmental comments on here. Seems like the population are happy for millionaires to avoid paying taxes and costs, yet when it comes to the average person then we should do the right thing and watch all our parents hard earned life times earnings be washed away.
FYI I have worked for one of the biggest care home providers (in a senior role in the finance department) - these are businesses and they do not care about providing care, they care about profits and getting cash in like any other business.  

Keep_pedalling

PierremontQuaker03 said:

Wow some amazing judgmental comments on here. Seems like the population are happy for millionaires to avoid paying taxes and costs, yet when it comes to the average person then we should do the right thing and watch all our parents hard earned life times earnings be washed away.
FYI I have worked for one of the biggest care home providers (in a senior role in the finance department) - these are businesses and they do not care about providing care, they care about profits and getting cash in like any other business.  

Rubbish, like many of us the value of your parents house has very little to do with hard work and lots to do with rampant house inflation. The main point of building wealth through your working years is to make sure you have security and comfort in your latter years. If you can leave something for your children after your death that is a bonus.

This is not an issue of the greed of a care home but greed of children who think that it is OK to shove the cost of care onto local authorities, simply to protect an unearned inheritance.

SevenOfNine

OP, this link is what you're investigating, I'm absolutely NOT recommending the company, it's merely one of many a google search will spit out to explain the pros/cons.

https://garner-hancock.co.uk/wealth-protection/what-is-a-life-interest-trust/

I've popped it in because IMO Marcon's post muddies the water, no-one is talking about the house or any % of it being put in a trust, you must be mindful of the Residence Nil Rate Band before going down that route, info here

https://www.gov.uk/guidance/inheritance-tax-residence-nil-rate-band

My brother has just had one set up, house left to adult daughter, life interest for his partner who he met much later in life. Various clauses regarding property maintenance, partner co-habitating or marrying etc. He used a very experienced solicitor & it cost him £2k.