How to Protect Your Assets from Care Home Fees
At Legacy Wills & Estate Planning, we understand that you would want future generations to benefit as much as possible from your estate. A common problem faced by families today is that many are forced to sell their family home to pay for nursing home fees. This is an unfortunate reality, where children are no longer able to inherit a share of the family home because of the cost of care. Home care fees can be extremely costly, and a large number of elderly people do not qualify for financial support.
Tenants in Common vs. Joint Ownership
Most couples own their home as joint tenants, which means when the first partner dies, the survivor may need to sell the family home to pay for a nursing home. This can often swallow up most or all the value of a property until the survivor’s assets have been brought into the threshold for financial support. Owning the marital home as tenants in common, however, means that only the half owned by the survivor is at risk from care bills, which means you have half the value of the family home to bequeath to your loved ones. To do this, the property is linked to a Life Interest Trust. A Life Interest Trust is an arrangement under which someone is given the right to occupy the property during their lifetime without ever becoming the owner.
The Life Interest Trust of a jointly owned property will only work where the house is owned by the couple as tenants in common, however most couples purchase the family home as joint tenants. Owning property as tenants in common with your partner means you both own the property, but own separate shares in the property. Usually, most couples each own a 50% share, but if one person is investing more of their money into the property than the other, the shares can reflect the amount each person has invested. When a tenant in common dies, their share of the property passes into their estate and is dealt with as per the terms of their Will. Owning your property as joint tenants means there is no separate distinction between tenants and you must act together as a single owner. It is not possible to donate your share of the property in your Will, nor do you own any specific shares in the property. When one of the tenants die, the ownership of the tenancy automatically transfers to the surviving owner.
Life Interest Trusts
The Will should set out details of who should be trustees for the Trust – typically this is the children, but you can appoint someone else if you wish. It will also lay out specifics such as when the Trust should end. This is typically on the death or remarriage of the surviving spouse. It should also state that, while the Trust is in place, the surviving spouse can live in the property without interference, but will not be able to sell or re-mortgage without the consent of the trustees. Our Trust & Estate Planning Consultants would be delighted to speak with you about the process involved, so you and your partner can have peace of mind for the future.
If you are considering setting up a Life Interest Trust, our Trust & Estate Planning Consultants can check the status of your home ownership by doing a Land Registry search. If the house is held as joint tenants, we will draw up the necessary documentation to sever the tenancy, changing it so that both partners hold the ownership as tenants in common. To do this, our Trust & Estate Planning Consultants will prepare what is known as a “declaration of severance of the joint tenancy”, which confirms that the joint tenancy has ended, and guide you smoothly through the process of changing ownership and setting up the Trust. Our friendly Trust & Estate Planning Consultants will offer advice tailored to your needs every step of the way on the best solutions for you and your family’s future.