Care home cost solutions

Ian Groome, expert in wills and trusts at Bowsers ANL-140728-152119001
Ian Groome, expert in wills and trusts at Bowsers ANL-140728-152119001

The understandable worries over long-term care destroying equity in family homes is a subject we are often asked about due to the huge amount of publicity it has received in recent years.

It is a subject which, quite rightly creates a great deal of fear, with some care costs being in the region of £40,000 per year, so it doesn’t take a mathematical genius to work out that for most normal people a few years with a parent in a care home could see off a life time’s assets.

Despite many newspaper column inches and much radio debate about the financial effect of care home fees not enough has been said about trusts.

It goes without saying for most people the family home is the main asset and once other savings have gone then the family home is under threat of being sold to provide for care costs, thereby leaving the legacy to loved ones dwindling and potentially a spouse out of the home they have had for many years.

Many people believe the best solution is to gift the property to intended beneficiaries and this will prevent it being sold if through illness or old age means a parent goes into 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 of the property will be acquired through the bankruptcy proceedings.

Also, an intended beneficiary could go through a divorce and the property will be considered part of their matrimonial assets when finances are being finalised.

So, essentially this is not a good idea as if you give your property away you have no control over what happens to it, thereby limiting your ability to control the property and your future options.

We at Bowsers would say 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 the case.

In its easiest form a trust is just a legal tool for separating the ownership of an asset into two parts the legal ownership and a beneficial ownership.

I shall not go into the complexities, but the benefit of writing the property into a trust is so that you can protect it from being used for care fees, but still have the security that you have somewhere to live.

Of course the factors surrounding trusts and protecting family homes are seldom straightforward, but those who wish to pursue this avenue should contact an experienced Wills and Trusts lawyer.

Looking a long way into the future especially about a topic like this can seem to some depressing, but posing these questions we believe is a mature attitude to the realities facing growing old and the pressures of modern life.