How Can My Will Protect Me From Care Home Fees?
‘How Can My Will Protect Me From Care Home Fees?’ Wills & Probate Solicitor, Charlotte Day, answers this frequently asked question in her latest blog…
There are many horror stories in the media about people having to sell their homes and pay thousands in care home fees.
As a result, we are experiencing an increasing number of clients coming to us for advice as to how best to protect their property against the impact of care home fees.
Will My Property Be Considered?
If you require residential care, then a financial assessment will be carried out to assess your means to pay for your care.
The assessment will take into account your savings and any interest that you may have in a property.
However, whilst your spouse/civil partner is living in your property, the property will need to be disregarded completely from the financial assessment, meaning that the local authority can only assess your contributions based on your savings.
Once your savings reach a certain level, the local authority may need to step in to assist with the payment of your care, or the care home might approach family to ask for a ‘top up’.
Your property will only be taken into account when your spouse/civil partner no longer lives there i.e. because they have died or moved into care themselves.
For some people using their property to pay for care is not a problem as they want to afford the best possible care they can. However, others want to protect as much of the property as they can to provide for their children or other loved ones on their death.
How Can I Use My Will To Protect My Property?
Your Will can be used to protect your interest in jointly owned property by way of a Life Interest Trust over your share of the property.
Most couples own property jointly as joint tenants which means that when one of them dies the property automatically passes to the survivor under the Rules of Survivorship. If this happens, then the whole property passes to the surviving spouse/civil partner and can be used to pay for their care home fees.
However, if a couple changes the joint ownership to ‘tenants in common’ they can ensure that their share of the property passes under the terms of their respective Wills and can be ring fenced for their chosen beneficiaries – in a Life Interest Trust.
The Life Interest Trust can be used to give the surviving spouse/civil partner the ability to stay living in the property for the rest of their life, or until the end of the trust period, if sooner.
The Life Interest Trust can be drafted to allow the survivor to move house and even downsize whilst still protecting the deceased’s share of the property for their chosen individuals.
The property could even be sold completely and the funds invested to produce an income for the survivor, or it can be rented out with the rental income being paid to the survivor.
Ultimately, the half share of the property that is in the Life Interest Trust will not pass absolutely to the surviving spouse/civil partner and therefore cannot be used to pay for their care.
When the Trust period ends, usually on the death of the surviving spouse/civil partner, the share of the property will pass to the chosen beneficiaries.
Are There Any Other Uses For Life Interest Trust Wills?
Life Interest Trust Wills are also useful in blended families where there are children from previous relationships as they can protect your share of the property for your own children, whilst still giving your spouse/civil partner (who may not be their parent) a roof over their head.
How Can Timms Help?
When thinking about how and where to leave your estate on your death, it is advisable to speak to a legal professional who can explore the options with you and explain any issues that you might not have thought about yourself.
If you would like further advice, please do not hesitate to contact me on 01283 214 231 or c.day@timms-law.com
April 2023