Can we transfer our property to our children now and avoid facing care home fees in the future?

Clients are becoming increasingly mindful about ‘future planning’ their estates to best protect their assets for theirs and their loved one’s future. Many people consider transferring property or cash gifts to their children during their lifetime as this is perceived as a good way to avoid care home fees that may be forthcoming. There are many factors to consider before thinking about transferring assets out of your estate in this way and Amye Aris, Consultant Solicitor in our Wills and Probate team, discusses what these are.

Clients see the transfer of property to children as a way of taking that asset out of the calculation of their overall assets. Residential care is increasingly expensive (anything upwards of £2,000 per week in some areas). Anybody with capital or assets worth more than £23,250 must contribute towards their own care (and are known as ‘self-funded’).

You must be very careful about intentionally reducing your assets – such as money, property or income in order that these won’t be included in a financial assessment for care home fees some time in the future. Things may go badly wrong if doing so is considered by the Local Authority as a ‘deliberate deprivation of assets’.  Local Authorities have the power to look back at historical transfers and gifts and set aside any transaction as void if they can prove a deliberate deprivation in contemplation of care home fees. If the Local Authority take this view, they will assess you as if you still had the property that you  have given away and include it back into your asset calculation when deciding what contribution you should make towards your care (if any).

We will advise you about an alternative to gifting your property and how you can retain your family home, or at least part of it, if you are faced with care home fees, and the answer lies in a Lifetime Interest Trust Will.

So what is a Lifetime Interest Trust Will and how does it protect me?

A Trust is set up within this type of Will that only comes into effect on the death of the first spouse. Both property owners hold their own distinct share in the property (usually 50%) as “Tenants in Common”. It allows the assets within the Trust to be retained for the benefit of the surviving spouse, who can continue living in the property for the remainder of their life or until they themselves need to go into a care home.

Whereas if you hold the property as “Joint Tenants” under a standard Will, half the property owned by one spouse automatically passes to the other, forming a part of that estate.

We can talk you through the process of severing a Joint Tenancy and becoming Tenants in Common and we will complete all the Land Registry formalities on your behalf.

Amye concludes “we will listen to each client’s personal and family circumstances and provide bespoke advice around the best option for you when it comes to estate planning. We always recommend seeking legal advice before you consider gifting property to children as there are many tax consequences and other factors to consider.”

To speak to Amye Aris about setting up a Life Interest Trust in your own Wills please contact us on 01908 542 677 or email [email protected]