How To Avoid Selling Your House To Pay For Care

Do I have to sell my home to pay for care?

You will not be entitled to help with the cost of care from your local council if you have savings worth more than £23,250. This is called the upper capital limit (UCL).

If you own your own property but can’t live there any more as you’re moving into a care home, you can ask your council for a financial assessment to check if you qualify for any help with the costs. If you don’t want a financial assessment, you can choose to pay for the care yourself.

Generally, we’re talking about care costs in relation to residential care. For medical treatment under the NHS, treatment worth more than £23,000 can be provided before you have to pay. With residential care costs, you can’t cap these.

How can I avoid selling the house to pay for my wife or husband’s care fees? How can I stop my home from being sold to pay for care?

One way is to instruct a Property Trust Will. This would protect one half of the property for your children or beneficiaries. It also prevents the local authority from going to the courts and possessing the property to pay for care, if one person dies and then the survivor goes into long-term care.

What is a Care Fee Will and how does it work?

You instruct a Will which creates a Trust that gives your spouse or partner the ability and the right to live in the property for the rest of their life. They have a ‘life interest’ in the property assets.

First, you change how you own the property from Beneficial Joint Tenants to Tenants in Common. We can send you a form to sever the tenancy at the Land Registry. You then own one half of the property and your spouse or civil partner owns the other half. When you die, your Will deals with your half of the property.

Whoever dies first, their half of the property is protected for the children and the local authority cannot assess it as part of the survivor’s assets. It is a good, simple way to protect the property and make sure it’s not taken to pay for long-term care.

What is a Care Fee Trust and how does that work?

This is the Trust that’s created by the Property Trust Will. After the first person has died, the Trust will hold one half of the property, and the surviving partner has a legal right to enjoy that asset for the rest of their life.

They can also take the proceeds from the sale of the property and use it to buy another one.

How can my parents avoid selling their house to pay for care fees? Can I give my house or assets to my children to avoid care fees?

It is not a good idea to give your home to your children in order to avoid care fees. What if the children later get divorced or perhaps become bankrupt?

We do have clients whose children go on to have problems with money and drugs. There’s always the chance that creditors or a court could kick you out of your own home, so we don’t recommend that.

The most cost-effective and simple way for your parents to protect the property from being used to pay for care fees would be through a Care Fee Will or a Property Trust Will. It would completely protect one half of the value of the property, and make sure that you inherit at least one half of the value when both your parents have died.

It’s not intended to protect the whole property, but the local authority cannot possess the property if one person dies and the other goes into long-term care.

What is the difference between Tenants in Common and Joint Tenants when owning a property?

If you buy a property jointly and you have a mortgage together, you are usually Beneficial Joint Tenants. This means if one of you dies, the survivor will own the whole property.

But once you’ve got children and grandchildren, and you want to make sure they will definitely inherit a good part of your assets, it’s worth considering severing the tenancy on your property. You would then own the property as Tenants in Common.

It means that you can deal with one half of the property in your Will, and your partner can deal with his or her part of the property in their Will. That will make sure the local authority couldn’t possess the property if one person dies and the survivor goes into long-term care.

It would also protect at least one half of the property if one person dies and the survivor gets remarried.

We do have experience of ‘predatory marriage’ where the surviving spouse is befriended by a partner who asks them to change their Will.

Can my spouse or family continue living in the house if I move into a care home?

Yes, A spouse has a legal right to continue living in the house. If you go into care, the local authority would not be successful if they went to the courts to possess the property if they are still living there.

But this does not apply to children, unless they are still dependents or they are vulnerable or disabled and have a legal right to live in the property. If the children are capable of making their own way in the world, the local authority could kick them out of your home and possess it.

If you want your children to stay in the property, you might want to take further advice about Lifetime Trusts. A Will Trust, a Property Trust or a Care Fee Trust will ensure they carry on living in the property if one person died and the surviving partner went into long-term care.

What are some common misconceptions about avoiding care home fees?

One has to be aware of something called Deprivation of Assets. If you give away assets during your lifetime, say to your children, the local authority can go to the courts and demand that money back to pay for your care. They argue that you deliberately gave the assets away, knowing that you may need them for care fees.

The solution, is a Care Fee Trust Will or a Property Trust Will. It means that one half of the property, the share of the persons who died first, is completely safe and cannot be accessed under the deprivation of assets rules.

What is a care means test? Is my home always considered in the means test?

A financial assessment would be done to see if you can afford to pay for care out of your own savings or from other assets such as property.

If your partner has passed away and you’re being assessed to see how much money you have to pay for long-term care, a Property Trust Will completely protects one half of the property assets, assuming that’s the amount that your deceased spouse owned.

When should I start planning to avoid selling my house for care fees?

To access this surefire way of protecting one half of the property, you would create a simple Property Trust Will and get it signed and witnessed.

What is a deferred payment agreement or DPA and how does it work?

I don’t get involved with this, but my understanding is that if you don’t have savings, other investments or a second property in your sole name, a deferred payment agreement will mean that your care fees will be paid out of your assets when the property is sold or on your death.

What else do we need to know about protecting your home from paying for care?

There’s probably a lot more to talk about. If people want to discuss Wills with us and get more information about dealing with the local authority, I can refer them on to people who know more. We know some real experts in Deferred Payment Agreements.

But Deprivation of Assets is certainly a concept one should try and understand. It’s also good to look at how you own your property, and potentially change from Beneficial Joint Tenants to Tenants in Common.

Once you understand how it all works, a Property Trust Will is a simple way of protecting your home and the inheritance for your children.

But if you want to protect assets for not just your children, but future descendants and save inheritance tax on a generational basis, there are other Trust Wills which create life interests. These can protect one half of the property and also half of a second property if you change its ownership.

It can also include assets held in your sole name like ISAs, bank accounts and investment accounts. We deal with those in other podcasts: these are Flexible Family Trusts.