If you, or a loved-one, is facing the prospect of a permanent stay in full-time residential care and is expected to pay a contribution towards this, the value of your assets will be assessed and that may include the value of your home.
Your home may not be taken into account for the cost of care whilst your spouse, partner, older relative, disabled relative, or child of yours aged under 18 still lives there. However, in other cases there is no option for it to be disregarded. Facing this situation can be incredibly overwhelming, and it is advisable for you to take your own advice from a solicitor who can advise you on the situation, specifically tailored to your particular needs.
For instance, if, you own your home jointly with someone else, such as your spouse or partner, there may be another option for you, which is to create a life interest trust in your Will. This trust will be designed to take effect after one of you passes away and will protect that share of your home if the survivor needs permanent full-time residential care.
Here’s an example case study of married couple John and Anne, who have a son and daughter, Joshua and Kelly, together:
- John and Anne own their home jointly, as tenants in common. This means that each owner has their distinct share of the property. In the absence of a document which lists what share is owned by which owner, it is assumed that each owner owns an equal share.
- They each have a 50% share.
- John, who has dementia, is receiving care at home by the family and with the benefit of a care package provided for by the local authority.
- Anne becomes unwell and sadly passes away. She leaves a will providing a life interest trust in her share of their home to John for the rest of his life, thereafter the Will states it would be split equally between Joshua and Kelly.
- The decision is made for John to move into full-time residential care on a permanent basis.
- John’s contribution to the cost of his care takes into account assets such as any cash in the bank that he inherited from Anne as well as his own savings, plus his own 50% share in their home.
- John does not own Anne’s 50% share of the house outright because it is in the Trust, therefore is not taken into account in the means test for his care fees.
- The house is sold and 50% of the proceeds are used for John’s care, and the other 50% share is invested under the terms of the Trust, with the income passing to John.
Another benefit of this kind of trust is that if the survivor decides to change their will in the future, in the case that they remarry for example, they cannot stop the share of the home of their previous partner that has died from passing on to their intended beneficiaries. Therefore, if in the above example, John stayed in the family home and met a new partner he would not be able to gift Anne’s share of the house to the new partner in his Will; that would still pass to Joshua and Kelly on John’s death.
This is one basic example of a life interest property trust. For many, the idea of creating any kind of trust in your will may feel quite daunting. We at Martyn Prowel Gartsides Solicitors can help you consider whether this would be appropriate depending on your circumstances. We will guide you through the practicalities in easy-to-understand terminology and will, of course, be on hand to advise your family after you have passed away.
Always seek specialist legal advice from a Solicitors for the Elderly (SFE) lawyer. They’ll have the expertise and experience to make the process as seamless as possible.