Safeguarding your house against care home fees

Whilst most of us will never require residential care, many clients ask us for advice on how they can protect their assets from being used to fund care if it does become necessary. This is a complex area and anyone wishing to protect assets should seek expert advice before doing so.

Giving away assets (including placing them into trust) with any intention of avoiding care home fees is referred to as a ‘deliberate deprivation of assets’. This means that social services will assess your assets as if they still included the assets given away. Unlike gifts taken into account for inheritance tax, there is no time limit as to how far back social services can enquire when assessing financial eligibility for care funding.

Not only that, if you give away your house, you lose control of it. If your relationship with the recipient of the gift breaks down, or they are declared bankrupt, divorce or die, you would be in an extremely worrying position.

Our advice to couples who own their own property is often to incorporate protection against care home fees in their wills. We can do this at relatively little cost by including what is informally known as a ‘life interest trust’ in the wills of both parties. If, after the death of the first of the couple, the survivor has to go into residential or nursing care, the half share of the house belonging to the first to die will not be taken into account for the purposes of assessment for state support for the survivor. However long is spent in nursing or residential care by the survivor, the half share of the proceeds of sale of the house belonging to the first to die will still be preserved and will not be lost to care home fees. This arrangement does not amount to a deliberate deprivation of assets as mentioned above because the person receiving care has not given anything away.

Several companies claim that their products can protect your whole property from being used to pay care home fees. Unfortunately, many of these companies are not regulated meaning that you have no protection when things go wrong. Too often, those products do not do what has been claimed, do not come with the necessary advice and offer little or no protection against care home fees. Please be cautious when taking advice and check that the company you are dealing with is regulated by the Solicitor’s Regulation Authority. All such law firms must hold professional indemnity insurance which is in place to protect you as a consumer.

Case Study

I recently helped George and Irene from Skegness. Some years ago George’s mother May, had been admitted to a residential care home. May had to fund her care by selling her house and the proceeds of sale had reduced to almost nothing by the time she passed away. As such, George inherited very little and he was determined to safeguard his own children’s inheritance. George and Irene then had a discussion with an estate planning company in a local shopping centre but came to us because they were shocked about the proposed charges. George and Irene accepted our advice and entered into life interest trust wills. They now find comfort in the knowledge that if one of them passed away and the survivor was to require residential care, the half share of the house belonging to the first of them to die will be protected for the benefit of their children.

If you would like to discuss any of the issues raised in this blog in more detail, or wish to discuss your own personal circumstances, then please contact a member of our specialist team on 0800 542 4245