Avoiding paying care fees...
The rules are different but in summary:-
One
If you give away assets, or dispose of them at an undervalue, but live less than 3 years after the date of the gift, the value of the assets will be added back into your estate for inheritance tax purposes. If you live at least 7 years then the value leaves your estate altogether.
Two
If you give away assets, or dispose of them at an undervalue, and social services prove that you did so with the principal intention of avoiding paying care fees, the value of the assets will be added back into your estate for the purposes of assessing your liability to pay care fees, no matter when the gift was made
So giving away your home, or money, carries risks, but we are here to help explain the risks and to advise on how to set up a family trust in the event that you do not want to completely gift away an asset, such as your home, but want to retain some control over it.
Some assets are exempt from care fees, such as investment bonds. Your own home cannot be taken into account during the first 12 weeks of care.
Case Study One
Many people have perfectly good reasons for transferring their home to their family. We had a client earlier this year who just wanted to make things easier for her children after she had died. She did not want them to have to go through probate and worry about paying for her funeral, so she transferred ownership of her home to her children, and bought a funeral plan, all before she died. When she went into a care home her house wasn’t taken into account, and £3000 of her savings could not be applied towards care fees because it had been used to pay for a funeral plan.
Case Study Two
A client told us that she had had her house improved and maintained through the direct financial contribution of her son. Rather than give him the house we advised our client to make a “declaration of trust” whereby she acknowledges the financial stake that her son had in her home, so when it came to social services assessing her ability to pay fees, they discovered that our client did own her home, but most of the financial interest in the property was owned by her son.
Main Contact:
Derby: Simon Richardson
Burton: Nick Green
Leicester: Pat Young
Avoiding paying Care fees:
A guide to gifting the family home