Are there risks if I help my children to buy a home?
Posted on 26th March 2019
The answer could be ‘yes’.
Many people are unaware that local Councils can investigate your finances if they think your cash and other assets have been deliberately reduced to avoid paying for your care.
The average cost of a care home in 2017 to18 was £750 a week. With the average length of a stay being around 30 months, a typical bill could be £90,000.
If Councils believe that someone has deliberately given away assets to avoid paying for their care, they can use ‘deliberate deprivation of assets’ rules to claw back the cost of care.
Paying for care
In England, if your assets are less than £23,250, you will have at least some of your care funded by your local authority. If you have more than this, and you need to go into residential care, you will have to pay until your assets fall below that amount.
When your local Council assesses your assets, your property will normally be included, so almost all homeowners should expect to pay for their care.
Understandably, many people want to leave something to their children or protect their home. They might consider making financial gifts or giving their children or grandchildren a deposit for a house.
Councils can reclaim
Freedom of Information requests made by lawyersforlaterlife.org have shown that many Councils are treating gifts as ‘deliberate deprivation’ and are investigating and reclaiming thousands of pounds.
There is a common misconception that, after seven years, a gift will fall outside the scope of a council investigation, as with inheritance tax.
What’s your intention?
The Council’s financial assessment will look at the timing and purpose of any gifts you make. It will be difficult to prove that your intention was to avoid care fees if you were in good health when the gift was given.
Similarly, if you put property into a trust when you are fit and well, naming your children as beneficiaries, your Council could find it difficult to reclaim care costs. However, it’s important to seek legal advice if you are considering this option.
If you had already been diagnosed with a serious illness when you took these steps, your intention would probably be queried.
Steps couples can take
If you are living as a couple and own a home together, you can make sure you are ‘tenants-in-common’, with equal shares. Then you can then set up your Wills to pass each other’s share to a trust held for your children or grandchildren.
If you go into care and your partner continues to live in the property, for example, it will be disregarded as far as care fees are concerned. If you then die before your partner needs care, your half of the property will be protected. However, if you both need care at the same time, the whole property could still be used to fund it.
You can find out more on the Which? website.
If you would like to discuss changing your will please get in touch.
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