Judging from the number of clients we see who are concerned about their lifetime savings being swallowed up to pay for their care in old age, this is a real worry for many and rightly so, when the average cost of care works out at approximately £500 per week. Whilst the Government have talked about new proposals, nothing has changed at present and if NHS funding is unavailable and your relevant assets exceed £23,250 you will need to fund your own care costs.
We are seeing an increasing number of couples who wish to transfer their home, usually their largest asset, to their children to prevent it being used by Social Services to fund future care costs. There is nothing to stop you doing this, of course, but we do not recommend it. There are a number of situations where the gift might prove ineffective and you will be taking a number of risks in so doing.
For instance, if you go into care within six months of the gift, then the recipient of the gift will be liable to pay for any care you receive. It is also easy to fall foul of what is known as the “deprivation rule” which means that you will be treated as owning any property that you have given away if your motive in gifting a property was to seek to avoid paying for your care costs. And another issue - Social Services can make you bankrupt if you are receiving care at Social Services’ expense and you cannot pay for yourself because you no longer own the house.
Aside from those risks, do you really want to rely on your children to keep a roof over your head? What happens if they get a divorce or go bankrupt? The house, your home, will be available as one of their assets and could be sold over your head. What happens if they die? It is unlikely that you are named as a beneficiary in their Will, but someone else will be and their executors will be obliged to look after the beneficiaries’ needs before yours. Or your child becomes mentally incapable, in which case his or her deputy might require their interest in your home to benefit the patient.
There are a number of tax implications too which you need to bear in mind if planning such a gift which we would be happy to advise upon. But more importantly, we believe there are more secure ways of safeguarding your assets. A Will incorporating a trust of some or all of your assets can mean that your spouse or partner is secure on your death while the capital in the house or other assets are preserved for the next generation.
At Spratt Endicott Solicitors we have a specialised team of solicitors to help protect and preserve your wealth and protect your family. If you require any advice on legal issues related to private capital, please contact Lucy Gordon, Partner, on 01295 204045 or email her at firstname.lastname@example.org
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