Can a Local Authority Retrospectively Claim for Care Costs After Sale of Property.

Sea_Shell

elsien said:

So it’s not his main home and he hasn’t lived there for five years? In that case, it may not be disregarded. I’m not sure though, so you’d probably have to get proper advice on that one. 

Would this still hold true if the property were owned as Joint Tenants, rather than TiC?

Could the surviving (and resident) estranged spouse be forced to sell?  

Marcon

This seems to be one of the better-informed recent articles which might help: https://www.carehome.co.uk/advice/do-i-have-to-sell-a-jointly-owned-property-to-pay-for-care-home-fees

Sea_Shell

Marcon said:

This seems to be one of the better-informed recent articles which might help: https://www.carehome.co.uk/advice/do-i-have-to-sell-a-jointly-owned-property-to-pay-for-care-home-fees

Thanks for that.  Interesting.

It doesn't seem to make a distinction between types of ownership.

AIUI, Joint tenants means you both own 100% of the property, rather than actual % split.

So if you aren't living there, would they consider the full value of the house?!? 😲

Spendless

I'm a bit surprised about this bit from that link ( I've bolded). I didn't think if you'd sold under value your kids could just say tough and keep it. I always thought (and thought I'd read on posts on here) that this sort of thing was looked into by LAs and either the money still had to be paid or a charge was put on the property. Have I got this completely wrong? Can anyone knowledgeable explain more? 

I want to pass my home on to my children, can I give it to them to avoid having to sell?

Some people believe that signing the deeds of their home over to their children is a good way to avoid inheritance tax and having to pay privately for care home fees.

You are within your rights to give away your home, but this may be seen by the local authority as a deliberate deprivation of assets. In this case, they will still count the property as part of your assets when calculating your funding, even though you now cannot use them.

This is something you should be very careful with, as it may cause problems if you need the money you are considered to have to pay for your care home fees, but it is now in the hands of your children.

If they are not willing to sell the property and use the money for your fees, they are within their legal rights and can keep it, meaning that you will likely have to move to a lower-budget care home.

Also, if they go bankrupt or get divorced, that home is part of their assets and they could lose it before they would have inherited it anyway, had you not given it to them early.

Furthermore, if the property is worth more than £325,000, you need to survive for seven years after you sign it over for it to no longer count as part of your taxable estate.

tooldle

It is correct. What is says is not to rely on your kids who now own the property, to sell and hand back the property / cash if it is determined that the property was deliberately disposed of to ‘avoid’ care costs

Marcon

Spendless said:

I'm a bit surprised about this bit from that link ( I've bolded). I didn't think if you'd sold under value your kids could just say tough and keep it. I always thought (and thought I'd read on posts on here) that this sort of thing was looked into by LAs and either the money still had to be paid or a charge was put on the property. Have I got this completely wrong? Can anyone knowledgeable explain more? 

I want to pass my home on to my children, can I give it to them to avoid having to sell?

Some people believe that signing the deeds of their home over to their children is a good way to avoid inheritance tax and having to pay privately for care home fees.

You are within your rights to give away your home, but this may be seen by the local authority as a deliberate deprivation of assets. In this case, they will still count the property as part of your assets when calculating your funding, even though you now cannot use them.

This is something you should be very careful with, as it may cause problems if you need the money you are considered to have to pay for your care home fees, but it is now in the hands of your children.

If they are not willing to sell the property and use the money for your fees, they are within their legal rights and can keep it, meaning that you will likely have to move to a lower-budget care home.

Also, if they go bankrupt or get divorced, that home is part of their assets and they could lose it before they would have inherited it anyway, had you not given it to them early.

Furthermore, if the property is worth more than £325,000, you need to survive for seven years after you sign it over for it to no longer count as part of your taxable estate.

The LA will look into it and conclude such a move was deliberate deprivation of assets. They won't need to put a charge on the property, because a LA doesn't have to 'pay now and try to get back later'. They will simply refuse to pay towards the care home fees.

Sea_Shell

Marcon said:

Spendless said:

I'm a bit surprised about this bit from that link ( I've bolded). I didn't think if you'd sold under value your kids could just say tough and keep it. I always thought (and thought I'd read on posts on here) that this sort of thing was looked into by LAs and either the money still had to be paid or a charge was put on the property. Have I got this completely wrong? Can anyone knowledgeable explain more? 

I want to pass my home on to my children, can I give it to them to avoid having to sell?

Some people believe that signing the deeds of their home over to their children is a good way to avoid inheritance tax and having to pay privately for care home fees.

You are within your rights to give away your home, but this may be seen by the local authority as a deliberate deprivation of assets. In this case, they will still count the property as part of your assets when calculating your funding, even though you now cannot use them.

This is something you should be very careful with, as it may cause problems if you need the money you are considered to have to pay for your care home fees, but it is now in the hands of your children.

If they are not willing to sell the property and use the money for your fees, they are within their legal rights and can keep it, meaning that you will likely have to move to a lower-budget care home.

Also, if they go bankrupt or get divorced, that home is part of their assets and they could lose it before they would have inherited it anyway, had you not given it to them early.

Furthermore, if the property is worth more than £325,000, you need to survive for seven years after you sign it over for it to no longer count as part of your taxable estate.

The LA will look into it and conclude such a move was deliberate deprivation of assets. They won't need to put a charge on the property, because a LA doesn't have to 'pay now and try to get back later'. They will simply refuse to pay towards the care home fees.

Quite.

Which leaves the family with "Oh 💩, now what?!"

Dig deep, family, dig deep.

Spendless

Marcon said:

Spendless said:

I'm a bit surprised about this bit from that link ( I've bolded). I didn't think if you'd sold under value your kids could just say tough and keep it. I always thought (and thought I'd read on posts on here) that this sort of thing was looked into by LAs and either the money still had to be paid or a charge was put on the property. Have I got this completely wrong? Can anyone knowledgeable explain more? 

I want to pass my home on to my children, can I give it to them to avoid having to sell?

Some people believe that signing the deeds of their home over to their children is a good way to avoid inheritance tax and having to pay privately for care home fees.

You are within your rights to give away your home, but this may be seen by the local authority as a deliberate deprivation of assets. In this case, they will still count the property as part of your assets when calculating your funding, even though you now cannot use them.

This is something you should be very careful with, as it may cause problems if you need the money you are considered to have to pay for your care home fees, but it is now in the hands of your children.

If they are not willing to sell the property and use the money for your fees, they are within their legal rights and can keep it, meaning that you will likely have to move to a lower-budget care home.

Also, if they go bankrupt or get divorced, that home is part of their assets and they could lose it before they would have inherited it anyway, had you not given it to them early.

Furthermore, if the property is worth more than £325,000, you need to survive for seven years after you sign it over for it to no longer count as part of your taxable estate.

The LA will look into it and conclude such a move was deliberate deprivation of assets. They won't need to put a charge on the property, because a LA doesn't have to 'pay now and try to get back later'. They will simply refuse to pay towards the care home fees.

So who does pay the care home fees if that happens? Let's say relative has  already moved to  a care home that is the same price as LA funding and it's discovered that they have sold their house under value to a relative and it's decided it's DOA. What happens then? 

Malthusian

If the care resident still has money left, they will pay it.

If not, the recipient of the gift will pay. From the Government's Care and Support Statutory Guidance:

Where the person has transferred the asset to a third party to avoid the charge, the third party is liable to pay the local authority the difference between what it would have charged and did charge the person receiving care. However, the third party is not liable to pay anything which exceeds the benefit they have received from the transfer.

The carehome.co.uk article is correct strictly speaking. The recipient can be compelled to pay up for local authority care, but they can't be compelled to sell the property so they can pay for you to go to a nicer care home, which is the risk that paragraph is warning of. 

Sea_Shell

As I understand it, many families are put under extreme pressure to pay "top up fees" even when there is no legal basis to oblige them to do so.