Case Study
Mr and Mrs Shore jointly own the family home. They are currently in good health and enjoying their long awaited retirement. Mr Shore has however recently been diagnosed with Parkinson ’s disease and wants to know if he will be forced to sell their home to pay for care fees in the future. Moore & Tibbits complete a Notice of Severance and split their shares in the home, legally, in half. We then prepare Wills for Mr and Mrs Shore setting up a Trust which directs that the half share will ultimately pass to the children, but also ensures that the surviving spouse can live at the home for as long as they want to. This means that if the surviving spouse then went into a Care Home only their half share, and not the whole value of the home, will be taken into account.
It is no longer lawful to transfer your home into your children’s names and continue to live there for the purpose of avoiding future care fees. If you do need to pay care fees in later life this will be treated as an intentional deprivation of assets and you will be liable for the fees as if you still owned the property yourself. Your children may also become liable for capital gains tax when the property is sold.
So what, if anything can be done?
If you are a couple and you jointly own your home you can legally separate your individual shares in the home by completing a Notice of Severance. This creates two distinct shares in the family home and means that each of you can then leave your own share as you direct in your will. The benefit of this is that it protects half of the value of your home. Your share does not automatically pass to your spouse and will not then be considered as part of their assets for the purpose of paying care fees. You will however be able to ensure that your surviving spouse can remain living in the property as long as they want to and indeed can sell and move to a different property should they want to do so.
This is achieved by setting up a trust within your Will. The beneficiaries of the Trust can be both the surviving spouse and additional family members including children and grandchildren. Your Trustees, on your death, will then manage the trust and will only distribute your half share to other beneficiaries when the property is eventually sold and they are entirely satisfied that the surviving spouse will no longer want to return to the Home and will not need to access any further monies that had originally belonged to the Spouse who died first.
An estimated 2/3 of people never make a Will. This is something we all know we should do, but often don’t quite get round to. Without one, your family/loved ones may not get what they were expecting and Intestacy Rules will apply. For those people who do make a Will, you can ensure your property and possessions go to loved ones or people of your choosing by incorporating a Trust within the Will.
Moore & Tibbits Solicitors of Warwick have a dedicated department which has been set up to provide comprehensive advice and support to clients who have concerns regarding care fees and who should pay them and whether people may be entitled to free care – known as Continuing Healthcare Funding. Often, as a starting point people are advised to look at their Wills to see whether it is appropriate to set up a Will Trust which then will ensure a substantial bulk of assets can be preserved and passed on to children.
Should you wish to discuss this area, we offer free initial advice so please contact Debbie Anderson on 01926 491181. In partnership with Age UK Warwickshire, Moore & Tibbits also run a variety of clinics throughout Warwickshire providing free legal advice. Fore details of the clinics nearest to you please click here or call Age UK direct.