care home fees

rexel

my wife and i are both in our over 60 how can we protect our house and savings from care home fees we have four grown up family who are living away from home

seven-day-weekend

I don't actually think there is any way you can make it completely safe.

Bear in mind that if even one of you stays in the marital home, then it will not be included when assessing care home fees.

Making the tenure tenants-in-common instead of joint tenants can help, as each of you will only own half the house, instead of both of you owning it 100%. Each one of you could then will your share to your children and then if one of you dies, the other one only owns half the house so it can't be included in care home fees. Please be aware that this can lead to other problems if your children get divorced/go bankrupt/just decide they want to sell their share.

There really is no sure way of totally protecting it, I'm afraid to say.

Also please bear in mind that if you rely totally on the Local Authoruty to pay your care home fees, then you will have no element of choice over where you go.

Also remember that only a tiny percentage of people ever get to go into a care home.

Hope this helps.

sloughflint

I don't agree with what you are saying here 7DW. I'll try to locate the info.

sloughflint

seven-day-weekend wrote: »

I Please be aware that this can lead to other problems if your children get divorced/go bankrupt/just decide they want to sell their share.

What you are describing is true if the share of the house is gifted outright. The alternative ( safer) is the Trust route within the Will.
Here is one of my posts from a while back.

The topic is covered elsewhere . I'll try to home in on relevant facts later and summarise here.

dunstonh

Property into tenants in common and a discretionary will trust written and investments placed into investment bond and provided neither of you need care within the next few years and nowhere is it documented that you did it for that purpose then you should be fine.

sloughflint

Rexel, I will try to explain what I have learnt in a couple of posts.
I am assuming that you have already made your mind up regarding the Care fee aspect and are merely looking for facts.I will just home in on these now and link to relevant single posts in due course.
The key to your objective is for you and your wife to simply have well written Wills.

sloughflint

As said further up, you will need to split your assets equally between you both. You house should be owned as tenants in common so that each half share can be willed however you choose.
Joint tenancy results in the half share of the house of the first spouse to die automatically passing to the surviving spouse regardless of what might be stated in a Will.( the same applies to joint bank accounts etc)

sloughflint

I agreed with 7DW up to a point but the key difference to ensure that the surviving spouse is not put into an unsafe situation ( bankruptcy/ divorce/ complete control etc), would be NOT to pass the half share of the house straight to the ultimate beneficiaries but instead for it to be put into a Trust.
A choice of two here. Discretionary Trust and Lifetime Trust.
I am no expert but I have learnt a little about both types and will go through what I think are pros and cons of each.

judy2357

You need to go to a Solicitor and:-

1. Sign a Notice of Severance (severing the joint tenancy of your home)
2. Change your Wills leaving half of the property to your wife/husband and the other to your children and insert a clause for the survivor to live there until his/her death.

This only safeguards half the value of the property again home fees. A solicitor will explain this better than me.

sloughflint

The life Interest Trust was very well explained in a link which features in the old thread that I mentioned further up.I couldn't explain it any better so won't try.
Here is the post and link.

Because half of the property has no market value it can't be assessed for care fees.

My trustees have to hold the property of the first of us until the second of us dies. In the meantime if I or my wife (whoever dies second) want to downsize, the trustees can allow us to do so. If there's money left over then I or my wife can be given the interest from it, but the capital is safeguarded.

Additionally if either of us runs low on dosh the trustees can loan us money from the fund.

Here's a link to the site that explains it quite well. I did poste a link to the site in a previous thread but removed it, but here it is again.

http://www.heritagewills.co.nr/care_fees_mitigation.htm

I know IHT wasn't mentioned but it is very relevant when considering the merits of the two types of Trusts.

Although the value of the whole house is counted for IHT purposes in the surviving spouse's estate with a life interest Trust, this will no longer be a problem for many couples since the IHT changes last October ( surviving spouse now entitled to double single IHT allowance ie £624 000 this year, £650 000 next and £700 000 in 2010).

Also,with the life interest trust, it will be 2 x the nil rate band that is in force upon second death – whereas with the DWT, the first nil rate band is frozen upon the death of the first spouse.

This type of Trust seems far simpler to administer compared to a Discretionary Trust where:

• there are costs involved ( exit fees, 10 year charge, professional financial fees if trust ever was to contain cash or other assets)
• is a time consuming option for the trustees ( requirement for Trustee meetings at the very least on an annual basis)
• probably necessitates solicitor involvement after both deaths. With a life interest Trust, many executors should be able to deal with each probate by themselves.

So apart from being cheaper to set up and administer, there could be an IHT advantage.
But crucially for your objective, Rexel, the whole property can be safeguarded from care fees, whereas with a discretionary trust, it’s arguable that only half the property is safeguarded.

seven-day-weekend

Yes - I forgot about the discretionary trust.

Glad I was right about tenants-in-common though!