“Can I transfer my property to my children to avoid paying care fees?”
Most of us may never need residential care in the future, however many clients ask us for our advice on how they can protect their assets from being used to fund residential care in the event that they required care in later life.
Can I gift my assets to my children?
A question we often get asked is whether clients are able to gift their assets away to their children to avoid this asset being taken into consideration if they required residential care. Giving away assets (including putting them into a trust) with the intention to avoid care home fees can be referred to as a deliberate deprivation of assets. A common misconception on this gift is that you can make the gift, as long as you survive the seven years afterwards. Unfortunately, this is not the case. If you require residential care in the future, social services will assess your assets and there is no time limit as to how far back they can enquire. This means that your financial eligibility will include the assets you still have and any assets you have given away, no matter how long ago. Ultimately, the gift would fail and the property can be clawed back into the estate for the financial assessment.
Relationship breakdowns and gifting
Another problem that you could face is the relationship breakdown between you and your children. Whilst many clients tell us that it would never happen to them, if you have transferred your property to your children and your relationship with the recipient breaks down, you could find yourself in an extremely worrying and vulnerable position. This could also happen if they were to die, are declared bankrupt or get divorced (the property could be taken into account in the matrimonial pot to be divided between them and their spouse).
Be cautious with “too good to be true” companies
You should always be cautious when dealing with companies who seem “too good to be true” and ensure the company you are dealing with are regulated by the Solicitors Regulation Authority and hold a professional indemnity insurance to protect you as a consumer if anything goes wrong.
HSR Law have Will writers that can help
Our Will writers can give you advice as to the best way to mitigate care fees within your Wills, and this is often to incorporate something called a Life Interest Trust in the Wills of both spouses. This would mean that after the death of the first spouse, if the survivor had to go into residential care, the half share of the first to pass away does not get taken into account in the financial assessment of the survivor. In simple terms, social services cannot use the first half share of the property to pay for the survivor’s care. Of course, the survivors own half share can still be taken into consideration, however you are still protecting 50% of the property worth no matter how long the survivor is in care for.
This mechanism would not be seen as a deliberate deprivation of assets as the half share of the property is held in trust for the first spouse’s beneficiaries. This mechanism is an effective way to ensure your beneficiaries still inherit something from your estate, however they do not legally own half of the property so they cannot force a sale of the property, the property cannot be taken into account in financial settlements or bankruptcy and the survivor has a home for the rest of their life without the worry of being forced out of the property by the interested parties.
If you wish to enquire more about Life Interest, Trust Wills or Wills in general, please do not hesitate to contact our Will writing team who can give you more information on the same.
Contact the authors
Please contact Emma, Kelly or Laura for more details or to arrange an appointment at any of our offices. Home visits may also be available for those who are unable to travel to an office.
This article was written by Emma, Kelly and Laura.
