Yahoo Finance 'Can I put my home in trust to dodge care costs?'
I am considering putting my estate into a trust fund for my children, this would mainly consist of my home. I am unsure how much protection this would provide if in future years I require expensive care.
I'm in my 70s, and fit and healthy. If I went ahead while I have no health issues, would a trust fund provide protection against any future care costs and guarantee the property would go to my children?
Is there a time period that applies from when the homeowner puts property into trust to time of their death? If a trust doesn't guarantee protection, can you advise me of how I can protect my children's inheritance?
JS, via email
Care costs can be up to £92,000 for the average length of stay in some UK regions, so it is clear why some want to protect their assets from being wiped out by care costs.
Using a trust to protect assets can be sensible estate planning. However, it is complicated, with a number of different types of trust available, and strict rules around many.
Barbara Gardener, senior consultant at tax specialists Technical Connection, said: “While a desire to protect your children’s inheritance is understandable, this type of planning is fraught with difficulties.”
Care costs are based on a means-tested assessment of an individual, which looks at any income, cash savings, investments, land and property.
The property will be counted as part of this assessment so long as it is not occupied by a certain list of people, including your husband, wife, partner or civil partner; relatives over the age of 60 who are incapacitated; or a close relative under the age of 16 who you’re legally liable to support.
If these assets are worth more than £23,250 in England and Northern Ireland, £25,250 in Scotland, and £23,750 in Wales (£30,000 from next month) then you will be liable for some of the costs of care.
However, how much you’ll pay depends on the region you live in, the cost of the care you need and the type of residential home you move into.
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Capital at risk
Ms Gardener said that individuals can transfer their property into a trust to protect it from being included in the assessment of their estate for care fee purposes.
She said: “If at the time you may need local authority assistance with your care fees you do not own a property, because it is held in trust, it should be protected unless the local authority were to decide that you had deliberately deprived yourself of the property in order to get help with the fees.
“When you apply for assistance you will be asked if you have ever owned a home and if you no longer own it what happened to it.”
"There are of course many other practical issues, in particular your loss of security and control over your home, which will be owned by the trustees. In short you need to discuss your options with a specialist in this area,” she said.
