The Family Home and Nursing Home Fees
We are sometimes asked “can I give my house to my children, or to a Trust, to protect it from having to be sold to pay nursing home fees”?
The short answer is no although the correct answer might be “maybe”!
State funding for residential care is provided by the local authority (LA).
To obtain funding you must pass a LA means test. If your assets exceed £23,250, you will have to pay your own fees. This includes the family home subject to exceptions such as where the home is occupied by your spouse.
The LA will ask questions about assets that you might have given away. If the LA consider that you have deliberately deprived yourself of an asset, they can treat the value of the deprived asset as if it were still owned by you. If, for example, you have transferred your home to a Trust which is regarded by the LA as a deprivation of assets you will be deemed to have assets well in excess of £23,250.
It is for the LA to prove deprivation of assets. To do so, they must show that avoiding paying care fees was for you a significant motivation for transferring your home to a Trust. They will also look at the timing of the transfer to the Trust and of your reasonable expectation of needing to contribute towards the cost of your care.
There are also tax issues involved in transferring any asset into a Trust.
It is appropriate to consider the moral issue. If you transfer your home to a Trust and are able to persuade the LA to meet your nursing home fees, is it right that the other council tax payers of the LA should pay your fees?
It may be possible, through the use of Trusts in a Will, to protect half the value of a home. If a home is jointly owned by a husband and wife, they could direct the half share of the first to die into a Will Trust. If the survivor subsequently needs nursing home care, the half share in the Trust should be protected.
We acknowledge that the law is not as clear as it could be and that, in part, has led to the growth in the sale of avoidance schemes. If you are considering setting up a Trust arrangement, we recommend that you take legal advice from a solicitor.
To discuss this matter in more detail, please contact our Tax, Trusts and Estates team on 01273 324041 or email@example.com