Fears over long term care taking equity out of family homes is a topic we are often asked about due to the great amount of media interest it has received in the past few years.
It quite rightly creates a great deal of worry, with some care costs being in the region of £800 per week, so it doesn’t take a great deal of calculating to work out that for most people a few years with a parent in a care home could see off a life time’s money.
Despite much debate about the financial effect of care home fees we believe not enough has been said about the role of trusts.
The family home is the main asset for most people and once other savings have been eaten up then the property is under threat of being sold to provide for care costs, thereby leaving a legacy dwindling and a spouse under threat of losing the home they have had for many years.
Many believe the soundest solution is to gift the property to intended beneficiaries and this will prevent it being sold if a parent spends their last days in a care home.
However, gifting is not always effective and it exposes people to risks as if one of the intended beneficiaries becomes bankrupt their share in the property will in many cases be acquired through the bankruptcy proceedings.
It is also worth pointing out, an intended beneficiary could go through a divorce and the property will be considered part of the matrimonial assets when finances are being finalised.
So, we believe gifting is not a good idea as if you give your property away you have no control over what happens to it, thereby jeopardising your future options.
We believe putting the property into trust provides protection in that the home then usually doesn’t have to be sold for care home costs.
Some believe trusts are only for the super-rich, but this is not true.
In its simplest form a trust is just a legal tool for separating the ownership of an asset into the legal ownership and a beneficial ownership.
I shall not go into the subject any deeper, but the benefit of writing the property into a trust is so that you can protect it from being used for care fees, yet still have the security that you have somewhere to live.
Of course the factors surrounding trusts and protecting family homes are not always straightforward, but those who wish to pursue this avenue of interest should speak to us.
Looking way into the future especially about a subject like this can seem a bit morbid, but posing these questions that won’t go away we believe is a sensible attitude to the realities facing modern life in England.
For further information or to discuss your issues, please telephone Paul Bownes on 0121 745 2810 or email him at [email protected]