Frequently Asked Questions about Care Home Fees
What is the basic problem with care home fees?
If an individual goes into a Nursing Home then the assets that that individual may have can be taken to pay for Nursing Home fees. The only amount that an individual can retain is the sum of £22,500.00. This may include any home that was owned by that individual.
Is it a good idea to give away my home (or if in joint names, my share) to protect myself during my lifetime?
There are two problems with this:
- The first problem is that giving away your home (or part of it) always involves a risk of losing control of your own property.
- Secondly, if you do give away your home (or part of it) with a view to avoiding Care Home fees, such a disposition can be set aside. Generally therefore giving away your home before death is not considered to be a good option and few people take it.
In any event, that would be carried out before death and is not the subject of a Will.
As far as a Will is concerned, can I take any steps to protect my half of the property should my surviving partner have to go into a home?
You can do this but you have to do two things:
- Firstly, you have to convert the ownership of the property from a Joint Tenancy to a Tenancy in Common. Please see our Guide to Wills as to the meaning of the terms Joint Tenancy and Tenants in Common. You will see that once you own the property as a Tenancy in Common, it becomes owned in two separate shares (which may not be half but not always) and then can then form part of separate estates.
- Generally individuals own a property between themselves as Joint Tenants. This has two characteristics:
Firstly ownership is regarded as being in equal shares and;
Secondly, upon death, regardless of what your Will says, the property automatically goes to the survivor. Therefore your surviving partner would inherit your share and your share could be used for care home fees if your partner then went into care.
Having now separated our shares by dividing the property, what now do I do?
From the questions and answers above, you should now hold the property as Tenants in Common and each of your shares can go into a separate Estate and can therefore be left within your Wills. If you leave your share to the partner and you die and the partner goes into care then your share may go towards paying care fees. To avoid that you leave your share in a Trust and not directly to your partner.
If I leave the share outside the relationship and my partner is still living in the property how can he or she be protected?
You leave the property in Trust and put your share of the property in Trust.
What is a Trust?
A Trust is an arrangement whereby there is a Trustee who deals with assets, in this case land, for the benefit of one or more persons referred to as “Beneficiaries”. The Trust should be constructed in such a way that your partner has the benefit of your part of the property, for instance that they can live there during their lifetime but do not have the full ownership.
Do you always recommend this?
No, this arrangement is very much a matter for you. Notwithstanding the advantages there are drawbacks.
What are the drawbacks?
Basically, the surviving partner/spouse has lost the total control of your half of the property if you die. It can only work if there is total trust between the partner/spouse and the other individuals involved.
Can you give us further illustrations of the difficulties that may arise?
You have to consider the following situations:
- A dispute between the trustees and the other individuals involved and your spouse/partner. Clearly that would be difficult.
- What happens if a house is sold and your surviving spouse/partner wishes to buy another house?
- They are going to need the consent from the Trustees to do so. Will they get it? If not then they can only use half the proceeds?
- What happens if work needs doing to the house? Consent needs to be obtained from the Trustees. That may be acceptable but what if the Trustees don’t consent or don’t wish to pay?
What if the surviving spouse/partner wishes to sell and either downsize or move into rented accommodation? In other words the surviving spouse/partner would wish to use some of the proceeds to buy other property but would also wish to take cash out of the property that has been sold for their own purposes.
If a Trust has been set up then this cash could be in the Trust and the Trustee might not agree, therefore leaving your spouse or partner in difficulties.
How would you sum up the situation?
The device of converting to Tenants in Common and creating a Trust may assist when it comes to avoiding Care Home fees in respect of your half of the property. However, you should only enter into an arrangement if you and your spouse/partner are entirely comfortable with the situation since there may be difficulties.
The pack will contain a guide to making a Will and Instruction Form.