As we age, it is natural to think about how best to protect our hard-earned assets for the future. You may be wondering whether placing your home in a trust could help you avoid care home fees.
While this can seem like an appealing option, the rules around care home fees and trusts are complex and strictly enforced. It’s important to understand that putting your home in a trust is not a guaranteed way to avoid costs entirely.
If you’re looking for ways to manage your assets effectively and reduce the financial impact of later-life care, our experienced Wills and Inheritance Tax Planning Solicitors and Lawyers can assess your situation and develop a strategy that aligns with your goals while protecting your interests.
For more information, please get in touch with our specialist solicitors or lawyers in Ashford, Cranbrook and Hythe.
Please be aware that this blog is for informative purposes only and should not be taken as legal advice.
What is a trust?
A trust is a legal arrangement that lets you transfer assets, which could include money, property or other high-value elements, to a trustee of your choosing. This is often someone in your close circle or family, but you can also consult professional trustees who have a job in managing finances for other people. There are various reasons to put your home in a trust, but the biggest one for most people is to avoid unnecessary taxation and protect your assets. Different types of trusts offer a variety of benefits, but they also have different rules and implications.
Is it a good idea to put your house in trust?
There is no one-size-fits-all approach to avoid paying care home fees. Putting your house in a trust might suit you depending on your circumstances and what generations may be around to assist you with financial management and mitigating other costs.
However, as with all major financial decisions, putting your home into a trust should be considered with caution.
Trusts can be complex and come with a range of legal implications, potential challenges, impacts on taxes and care fee assessments.
Can I put my property in a trust to avoid care home fees?
Local authorities will keep an eye on most major financial decisions that you make towards the end of your life.
If you expressly put your house in a trust to avoid care fees, then it may be seen as a deliberate deprivation of assets.
In this case, your property may still be considered a part of your assets when calculating care costs.
However, there are legitimate ways to utilise trusts for protecting assets from care home fees.
Our solicitors can help you explore your options and ensure that you are using methods of asset protection that offer both long-term benefits for you and your family and are fully legally compliant.
What is the best trust to avoid nursing home costs?
Typically, a discretionary trust or life interest trust will be used as part of estate planning since it allows you to put your house in a trust fund without it being included in care cost assessments.
You might also consider transferring a house to a child to avoid care home fees, but there are a number of rules to consider that may impact how you may use the property in the future and the title deeds.
The best trust for you will be dependent entirely on your circumstances and goals. A professional legal financial planner with expertise in trusts and estate planning can offer you valuable insight into the best way to achieve this.
What assets are exempt from care home fees?
Certain assets may not be included in case home fee assessments, and it’s important to understand these exemptions and how to utilise them properly.
Some of the assets that may be valid for exceptions include:
• Jointly owned properties
• Certain pension schemes
• Personal possessions like furniture, art and jewellery, and;
• Income from an annuity that is intended for a spousal dependent.
What are the disadvantages of putting your house in a trust?
Setting up a trust can be expensive, as they can have ongoing administration fees. Trusts themselves also often have tax implications, particularly when it comes to capital gains tax and inheritance tax. You also may lose some control and authority over your own property.
Generally, it is mismanaged and poorly organised trusts that can lead to pitfalls, excessive expenses and possibly even disputes if they have unclear or restrictive terms.
If you are considering putting your home into a trust to avoid care home fees, speak to a specialist. They can ensure that whatever decision you make is not only in your best interest but properly executed.
How do I protect my inheritance from a nursing home?
Various strategies are available for protecting your inheritance from a nursing home, including creating a trust, purchasing financial products such as annuities, and restructuring your asset portfolio.
You are strongly encouraged to speak to a specialist as early as you can because planning done well in advance stands a much better chance of succeeding and ensures that once your care needs begin, even if that is sooner than you would have anticipated, you will be fully provided for.
Last-minute transactions will also draw more scrutiny from local authorities, so having a long-term plan in place is preferable.
By seeking professional legal advice, you can set up a timeline that ensures that you can financially ease into your future within care funding rules but not at the cost of your family’s inheritance.
Speak to our Wills, Probate and Powers of Attorney solicitors and specialist lawyers today
We recognise how important it is to feel reassured that your wealth can protect you through the later years of your life, even if unexpected costs occur.
Our practice is committed to ensuring that our elderly clients feel supported with a specialist team of Wills, Probate, and Powers of Attorney Solicitors and specialist Lawyers for Older Clients.
If you would like more expert insight into how to protect your assets, you can speak with one of our knowledgeable solicitors or lawyers in Ashford, Cranbrook and Hythe.