When you purchase your home and spend years paying off your mortgage, making sure it passes to your loved ones is really important. For most people it is important to protect their home, a large concern is that after spending years paying off a mortgage this money will then be spent on funding care home fees leaving your children with little to no inheritance.
After seeing how much care home fees costs after maybe having to deal with putting a parent into care, understandably people often ask if they can transfer their home to their children to avoid losing it to care home costs.
Before considering gifting your property, first it is worth considering how care home fees are funded.
If the local council is arranging your care home they will carry out a means test to determine how much you should pay towards it. If you live in England and have assets or savings worth more than £23,250 you’ll have to pay for your care home fees.
The £23,250 includes your property, so if you own your home it is highly likely you will need to fund your care. That being said your home won’t be counted if it is still occupied by your partner, any relatives over 60, your children if aged under 18 or any relative who is disabled. Therefore you can be comforted that if you were to go into a care home and your partner still lived in your home they won’t be forced to sell the home to fund your care.
Knowing that the local council carries out a means test to assess care funding a lot of people ask for their home to be transferred into their children’s names, this is fraught with problems. If you were to give away your home to your children and they were to find themselves in financial difficulties or subject to divorce proceedings your home would be vulnerable.
On a more basic level if you wanted to move house you would need to ask your children, if you were to fall out with your children this could become difficult, therefore people consider putting their home into a trust.
Although transferring your home into a trust helps to protect your property from your issues such as your children’s divorce or financial difficulties, you may still have to pay care home fees. If the council deems that you have deliberately reduced your assets to avoid paying care home fees, they may still calculate your fees as if you still own your home, therefore if you were to give your property to your children or into a trust the council may conclude that you have deliberately deprived yourself of assets and therefore your home may still form part of a means test.
If you were to put your property into trust there aren’t any firm rules as to whether or not the local authorities will include your home in a means test, therefore there isn’t a way of guaranteeing that gifting your property, even into trust will help you avoid paying care home fees.
That being said you may wish to gift your home for different reasons such as passing on the burden of ownership, avoiding delays on death or just for general affection in which case using a trust is worth considering.
At the Grand Parents Legal Centre, we can review your circumstances as a whole and help with your planning, it may be that you end up wanting to retain your assets so you can choose the type of care that you would like.
Call us today on 0843 289 7130 if you require legal help or advice.