Asset/Estate Planning Advise

ciscobloke01

Hi

My parents have asked me to look into possible ways to protect the family home and some savings they have from being used by the government for care costs if needed in the future.

At the moment all we know is they own their house outright as Tenants in common and would be looking at ways to protect all or as much as possible of this.  They have three Adult Children)

Inheritance/CGT does not factor here, just looking for ways to try protect the home

Thanks

tacpot12

Why don't they want to pay for their care? If they expect the council pay for all their care, they will end up in the cheapest care home the council can find. If they pay for it themselves using the assets they have saved over the years, they can have the best care they can afford.    

If they do try to protect their assets because they are expecting to need care, the council will do the financial assessment as though they still owned the assets, and will find that they don't qualify for any help at all. (Look up 'deliberate deprivation of assets'). 

Don't be taken in by solictors that say they can get around this. Do your research - there are lots of threads on MSE about this topic. I'm sure some of them will be more useful than mine, but it's a bit of a minefield, so I'm just saying be careful where you step. Your parents could end up with problems they never dreamed of such as being homeless. 

Age UK has some great resources. 

ciscobloke01

Yes I know all about deprivation of assets etc.  They say they have worked hard all their lives to provide a decent family home, paying taxes along the way and dont want it all going on care fees should they need care. 

Even if they managed to protect half the house from attack of care home fees it would be something.

Keep_pedalling

Obviously they are not worried about ending up in over my dead body grange.

There is only one sensible option and that is for each on them to leave their share of the home to their children with the surviving spouse maintaining beneficial ownership via an immediate post death interest trust. This protects 1/2 the house from being used from care costs for the surviving spouse or from the remarriage of that spouse. 

In the unlikely event that both need residential care at the same time then this will not work but at least then they will both get a better course of where and who cares for them. 

ciscobloke01

OK so i assume that if one needs care whilst the other is alive and still living in the house that be setting up trusts with the children for each others half would mean they couldn't use the house as they effectively only own half a house? 

Keep_pedalling

ciscobloke01 said:

OK so i assume that if one needs care whilst the other is alive and still living in the house that be setting up trusts with the children for each others half would mean they couldn't use the house as they effectively only own half a house? 

If one needs care while the other is still living in their home is disregarded no trusts needed.

What I was suggesting is that on the first death that that share of the house goes into trust, That trust is created by the will and automatically comes into effect on death not before. The surviving spouse would retain beneficial interest in that share but legal ownership sits with the trust until they die at which point the remaindermen (you and your siblings) will inherit. 

This does not mean the other share of the house would be excluded if they need care just because the legal ownership is split. 

Try to protect the whole thing is just not on and if anyone suggest they put the whole house in trust that person is doing so too set up a useless trust for a big fat fee and they are the only people that will benefit.

Would you really want your mother or father not be able to get the best care they can get at the time they need it (not the time the LA think they are decrepit enough to have it funded) just so you and your siblings can inherit more?

Savvy_Sue

Sigh. Have they done their research on the % of the population who need residential end of life care? It's low, and the % of the population where both members of a couple need such care is even lower. 

As long as one of them is still living in the house and over 60, the house will be disregarded in any assessment for what they need to pay. 

Please, persuade your parents to use their resources to keep themselves as fit as they can, and to get help to enable them to remain in their own home if that is practical and what they want to do. 

ciscobloke01

Keep_pedalling said:

ciscobloke01 said:

OK so i assume that if one needs care whilst the other is alive and still living in the house that be setting up trusts with the children for each others half would mean they couldn't use the house as they effectively only own half a house? 

If one needs care while the other is still living in their home is disregarded no trusts needed.

What I was suggesting is that on the first death that that share of the house goes into trust, That trust is created by the will and automatically comes into effect on death not before. The surviving spouse would retain beneficial interest in that share but legal ownership sits with the trust until they die at which point the remaindermen (you and your siblings) will inherit. 

This does not mean the other share of the house would be excluded if they need care just because the legal ownership is split. 

Try to protect the whole thing is just not on and if anyone suggest they put the whole house in trust that person is doing so too set up a useless trust for a big fat fee and they are the only people that will benefit.

Would you really want your mother or father not be able to get the best care they can get at the time they need it (not the time the LA think they are decrepit enough to have it funded) just so you and your siblings can inherit more?

So to clarify, they would both need to state in the wills that each half goes to trust?  Do they need to be Tenants in common with the land registry to do this?

I'm not clued up at all but just found out they had an appointment with a solicitor to transfer the property to us children. I take it this is not advisable? 

RAS

ciscobloke01 said:

Keep_pedalling said:

ciscobloke01 said:

OK so i assume that if one needs care whilst the other is alive and still living in the house that be setting up trusts with the children for each others half would mean they couldn't use the house as they effectively only own half a house? 

If one needs care while the other is still living in their home is disregarded no trusts needed.

What I was suggesting is that on the first death that that share of the house goes into trust, That trust is created by the will and automatically comes into effect on death not before. The surviving spouse would retain beneficial interest in that share but legal ownership sits with the trust until they die at which point the remaindermen (you and your siblings) will inherit. 

This does not mean the other share of the house would be excluded if they need care just because the legal ownership is split. 

Try to protect the whole thing is just not on and if anyone suggest they put the whole house in trust that person is doing so too set up a useless trust for a big fat fee and they are the only people that will benefit.

Would you really want your mother or father not be able to get the best care they can get at the time they need it (not the time the LA think they are decrepit enough to have it funded) just so you and your siblings can inherit more?

So to clarify, they would both need to state in the wills that each half goes to trust?  Do they need to be Tenants in common with the land registry to do this?

I'm not clued up at all but just found out they had an appointment with a solicitor to transfer the property to us children. I take it this is not advisable? 

Highly inadvisable to give the house away.

Would be considered derivation of assets anyway. If they've got enough otherwise to fund care homes, it might well be over my dead body grange. 

There's a current thread where son was gifted mum's part of the house long ago and is now demanding the couple sell their home to let him access the equity. I've seen even worse IRL when the donor was put up in a caravan when the gifted property were sold and child moved.

Add to that if any of the children go BR or get divorced, or even die, their portion of the equity may have to be released (house sold).

Re the Immediate Post Death Interest trust, it does require the property to be held as tenants in common. That merely requires one parent to write to the other severing the tenancy, and that restriction can then be recorded on the deeds.

Keep_pedalling

ciscobloke01 said:

Keep_pedalling said:

ciscobloke01 said:

OK so i assume that if one needs care whilst the other is alive and still living in the house that be setting up trusts with the children for each others half would mean they couldn't use the house as they effectively only own half a house? 

If one needs care while the other is still living in their home is disregarded no trusts needed.

What I was suggesting is that on the first death that that share of the house goes into trust, That trust is created by the will and automatically comes into effect on death not before. The surviving spouse would retain beneficial interest in that share but legal ownership sits with the trust until they die at which point the remaindermen (you and your siblings) will inherit. 

This does not mean the other share of the house would be excluded if they need care just because the legal ownership is split. 

Try to protect the whole thing is just not on and if anyone suggest they put the whole house in trust that person is doing so too set up a useless trust for a big fat fee and they are the only people that will benefit.

Would you really want your mother or father not be able to get the best care they can get at the time they need it (not the time the LA think they are decrepit enough to have it funded) just so you and your siblings can inherit more?

So to clarify, they would both need to state in the wills that each half goes to trust?  Do they need to be Tenants in common with the land registry to do this?

I'm not clued up at all but just found out they had an appointment with a solicitor to transfer the property to us children. I take it this is not advisable? 

No it would be a terrible idea. As they remain living there  it becomes a gift with reservation which means it never falls out of there estate for IHT purposes (unless they are also going to pay you full market rent to stay there) and will be subject to CGT on any gain in value when it is sold. 

The LA would also look at this as deliberate deprivation of assets should residential care be nessesary for a surviving spouse. There house would also be an assets if you or any of your siblings divorced, or go bankrupt. It would also potentially cause problems if any of you are (or become) dependant on means tested benefits or die before they do.

Please don’t let them do this it is utter folly. 

ciscobloke01

Keep_pedalling said:

ciscobloke01 said:

Keep_pedalling said:

ciscobloke01 said:

OK so i assume that if one needs care whilst the other is alive and still living in the house that be setting up trusts with the children for each others half would mean they couldn't use the house as they effectively only own half a house? 

If one needs care while the other is still living in their home is disregarded no trusts needed.

What I was suggesting is that on the first death that that share of the house goes into trust, That trust is created by the will and automatically comes into effect on death not before. The surviving spouse would retain beneficial interest in that share but legal ownership sits with the trust until they die at which point the remaindermen (you and your siblings) will inherit. 

This does not mean the other share of the house would be excluded if they need care just because the legal ownership is split. 

Try to protect the whole thing is just not on and if anyone suggest they put the whole house in trust that person is doing so too set up a useless trust for a big fat fee and they are the only people that will benefit.

Would you really want your mother or father not be able to get the best care they can get at the time they need it (not the time the LA think they are decrepit enough to have it funded) just so you and your siblings can inherit more?

So to clarify, they would both need to state in the wills that each half goes to trust?  Do they need to be Tenants in common with the land registry to do this?

I'm not clued up at all but just found out they had an appointment with a solicitor to transfer the property to us children. I take it this is not advisable? 

No it would be a terrible idea. As they remain living there  it becomes a gift with reservation which means it never falls out of there estate for IHT purposes (unless they are also going to pay you full market rent to stay there) and will be subject to CGT on any gain in value when it is sold. 

The LA would also look at this as deliberate deprivation of assets should residential care be nessesary for a surviving spouse. There house would also be an assets if you or any of your siblings divorced, or go bankrupt. It would also potentially cause problems if any of you are (or become) dependant on means tested benefits or die before they do.

Please don’t let them do this it is utter folly. 

Thanks, No I wont let them do this.

My suggestion to them would be to leave each others half in trust to the children. I'm assuming/hoping this way though, following death of the first that when the remaining needs care, they only take into account half the house value?

What about any savings?  My idea was to slowly give this to us for us to look after for them and give back as and when needed.  I know people will say its dangerous, and what if x divorces or needs benefits etc etc but im not looking for the negatives on that front, just the answer to my question.