Many people are still unaware that if they need social care their assets will be means tested by their Local Authority to pay for it.
We hear many stories about the different steps people take to try and safeguard their assets in an attempt to avoid having to pay care costs. A popular request we receive from clients is to transfer their home into the names of their children. They believe that, by doing this, their home will not be taken into consideration should they need to go into care in later life. This is simply not true and we advise our clients accordingly.
Local Authorities can and will investigate any transfer or property or assets. If they determine that anything including the house has been transferred into another name to avoid being taken into consideration for means testing then they will decide there has been a deliberate deprivation of an asset. This may then leave the client still having to fund their care.
Many are under the misapprehension that if the house has been transferred more than seven years ago then it is safe. Again this is not true! There is no time limit after which the Local Authority will not look behind a transaction of this kind. With funds becoming more and more limited, Local Authorities are taking a much more robust approach to their assessments.
A sensible solution may be for couples not to leave their entire estate outright to each other. For example, where Mr & Mrs Smith own a house jointly, they may decide to leave their respective half shares in the house to a trust for their children. This will allow the survivor to continue to remain in the property after the first person dies. These are often referred to as “right of occupation wills”. So Mr & Mrs Smith can make right of occupation wills leaving their respective half share of their property to their children. If Mr Smith dies, his half share of the property is protected in a trust for his children and Mrs Smith has the right to continue residing in the property. If she subsequently falls ill and has to move into a care home the Local Authority will assess her assets to determine her contribution towards the cost of that care. She will only be means tested on her half share of the house. Mr Smith’s half share of the house is protected in full and can pass to the children.
Please seek advice as to the right sort of will for your circumstances, whether these include a right of occupation or not. We will advise you on what will is best for you. If one of you dies or loses mental capacity, it is likely to be too late!
Don’t delay, make your Will today.
Contact our Private Client Team on 0121 511 2233.