Probably the biggest worry and most contentious issue that people talk to me about is that there will be nothing left for their children to inherit if they need to pay for care later in life.

…People often fall into two categories, those who are pained at the thought of paying out more than they already have during their lives and those who accept that if you have the means to pay, then that’s what you should do. Neither side is wrong, but it is always worth exploring your options regardless of which way you lean.

Many clients approach me regarding putting their home into a trust to avoid it being used to fund long term care, but this is rarely a viable option. In fact, if you have been advised to put your property into a trust to avoid it being used to fund care home fees then it is very likely that you have been mis- sold a product that won’t work. Worse still, if you have already put your property into a trust and then go on to require care your actions may be considered deliberate deprivation by the local authority and in most cases the trust won’t work- despite you having paid thousands to set the trust up. The local authority are wise to such trusts and should you require care, they simply set aside the trust as though it doesn’t exist and value your estate with your property included. The onus is on you to prove there was a legitimate reason for creating the trust that wasn’t anything at all to do with care home fees. You are considered guilty until proven innocent. For the trust to work, you would have to fail to disclose its existence at the point of assessment, and in doing so you’ve probably committed benefit fraud.

The other ‘trick’ that people are advised of, is to sign over your property to who would eventually inherit it anyway. However, unless you then start paying the new owner the full market rent this becomes a gift with reservation. The new owner may also become liable to pay capital gains tax at a level that they probably wouldn’t have had to if the property hadn’t been signed over. A total lose- lose situation.

If we accept that you’re going to need care at some point and it that will need to be paid for and that you will want a high standard of care, then look at what you can legitimately do that isn’t going to land you in hot water with the local authority, the tax man or leave disgruntled children.

Using a Life Interest Trust in your Will secures half of your property for your chosen beneficiaries. It does so by you leaving your half of your property to beneficiaries other than your partner on first death but with a Life Interest in the property for your partner. This means that your partner can carry on living in the property treating it as though it is theirs in its entirety including being able to sell the property and buy another in its place. The person with the life Interest needs take precedence over the beneficiaries until stipulated within your Will but your share is not owned by them so should they go on to need care only their half of the property can be assessed as a means of paying for care. Your children will therefore inherit at least half of the value of your property and your partner will be able to afford decent care.

To talk about the options that are legitimately available to you or to discuss any concerns that you may have about your existing Will or trusts please contact me on 01903 821010 or emma.wells@nsure.co.uk.