Putting house into trust

msb1234

What you’re proposing can come back and bite the surviving spouse. 
Say for example that whilst both are still alive, one partner requires residential care for 3 years before they die. That care could cost upwards of £1k a week, so over 3 years over £150k. Most of that person’s income (State and private pensions) could be used and half of joint savings will be taken into account along with any savings solely in their own name. So it could be that by the time hey die, all their savings (bar £14.25K) could have been used up in fees. Now, in the meantime, spouse number 2 might need residential care, at similar costs. However, if they have less money and will rely on the house equity to pay fees, they could end up in some grotty local authority funded home to end their days.
My stepfather is in precisely this situation. It took me 18 months to get Deputyship as he had dementia so we couldn't sell his own house. His care was partially funded by the LA. Now the house is sold, he will be a self funder but I can’t move him from his grotty home as he is so settled. He’s under a DOLs order, and his social worker will not approve a move. Even with Deputyship, I have no say in this. 

The_Governor

Keep_pedalling said:

The_Governor said:

Keep_pedalling said:

The_Governor said:

Thanks for all the comments, apologies I didn't get notifications of responses

So, I'm getting there's a bit fo anti trust sentiment but not much detail behind it so I'll go hunting for other threads to see what I can find

No anti trust sentiment here, they can be very useful, but they need to be used with care and can cause major issues if not used appropriately and nothing you have said indicates that this is an appropriate situation for a trust. 

Beware of companies that charge large fees for setting up trusts that turn out to be useless. There are plenty of salesmen who sell these for the fat fees they can charge and will be long gone before you or your or those you leave behind find out that it was an expensive mistake.  

Would you mind expnanding on the thought a bit? What I'm really trying to do is protect half the value of the house to allow some inheritance to pass to the children, my understanding was that a Trust is a vehicle for this so could you explain why you don't think it's appropriate, I'm in learning mode so any and all opinions are welcomed

An appropriate trust for people your age is most likely to be an immediate post death interest trust. In the unfortunate event of one of you meeting an early demise, you could leave your share of the house to your children but give the surviving spouse a life interest in the property. The surviving spouse would be the beneficial owner of the whole  property, with legal ownership of the share previously being owned by the deceased spouse residing with the trust.

This provides security for the survivor and protects your beneficiaries in the event the surviving spouse gets changes their will or fails to make a new one on getting remarried or goes into care. It is also tax efficient as you beneficiaries will not pay CGT when the property is eventually sold and none of your NRBs are used up. This sort of trust is created by your will, so all that needs to be done is to make sure you own your property as tenants in common and have an appropriate will in place. The trust does not come into Planck unless one of you dies.

If you were to put your house in trust now, you are creating a whole bunch of potential problems including some significant tax disadvantages both with CGT and IHT. 

Thanks, that was my intention form the start, I probably didn't make that clear enough in my OP, the idea is purely to attempt to protect some inheritance for our children after death, while still leaving some to fund care for the survivor if that ever happens

We just met with the solicitor and this was what he was talking about too, so we're pretty aligned, he did give us some things to think about which was useful so we just need to write it all down then go back.

Thanks for your input, it's appreciated

silvercar

Would an immediate post death interest trust allow the surviving spouse to sell the house to downsize?

RAS

silvercar said:

Would an immediate post death interest trust allow the surviving spouse to sell the house to downsize?

If written correctly, and possibly to benefit from any income derived from investing the capital. It's one to make sure the lawyers understand and record as the donor wishes.

35har1old

Devongardener said:

Why would you want to deprive yourselves of the chance to have the best care, in a good care home, if needed? If you have no means of funding your care you risk being put wherever the local authority deems fit, or minimal care in your own home.
Putting the house in trust can be seen as deliberate deprivation of assets.

Only if it's near the time of entry to the care system.
In this case you would hope it's 30 years from now