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How To Avoid Selling Your House To Pay for Care?

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Care home fees in the UK are expensive depending on the type of care required whether it is residential care, nursing care or dementia care.  It is important to plan to understand how you will be paying for the care of a loved one. 

This can include finding out about government benefits, considering private insurance to pay for lifelong care or selling a family home to fund it. 

This article does not give financial, legal or tax advice and it is best to consult with professionals before you take any action.

It is only natural that you are considering how to protect your assets from care home fees – and to pass on inheritance to your loved ones.

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How can I avoid losing my house to pay for care?

If you intend to leave your home to your children, then the prospect of having to sell it to pay for care will be distressing.  Before we go into more detail on how to avoid losing my home to pay for care, these are some important points to remember:

  • It is illegal to avoid paying for care home fees or putting it into a Trust. This is known as deprivation of assets.
  • There are legal options available to you that can help you protect your assets while paying for care.

If you give away your family home to avoid care fees, it is likely to be seen as a deliberate deprivation of assets. Your local authority will reclaim payment from you. 

There are additional steps you can take – but it is important to do so well in advance before any care is needed.

You can transfer your property to a Trust with your children as trustees.  However, with a transfer of ownership, your children can kick you out as it will be no longer your home. 

According to the ONS 2021 survey, approximately 35% of homeowners are self-funding their care.

There must be other reasons for doing so apart from simply avoiding care home fees.  It is best to speak to a Trust specialist who can give you financial and legal advice before doing so.

Can I put my house in Trust to avoid care fees?

You absolutely can.  It is recommended that you speak with a solicitor specialising in Trusts to ensure that your trust is valid and to avoid issues with deprivation of assets. 

There are three types of Trusts including Protective Property Trusts, Life Interest Trusts, and Interest in Possession Trusts.

Prior planning is essential if you wish to legally avoid paying for care home fees.  Part of your financial planning will require long term care insurance policy. 

It is often too late if your health begins to decline, and you are looking at needing residential or in-home care.  If you are facing ill health, the only option left is to sell your property for cash, releasing the equity tied up and downsize to a smaller property such as a bungalow.

How to avoid selling your property to pay for care home fees
Prior planning and professional advice is crucial in enhancing your chances of getting council funded care.

Can I give away my money and assets to avoid care home fees?

You simply cannot give away money or assets to avoid care home fees however, under exceptional circumstances it is possible to transfer assets so that it is not considered as a deliberate act deprivation of assets.  It is best to speak with a solicitor with Trust experience.

If your assets including property exceed £23,250 then you will not be able to protect them from care home fees.  This threshold applies to local authorities in England.  Similar thresholds applies if you are in Scotland, Wales, and Northern Ireland.

Even if you are offered council-funded care, it might not meet your specific preferences or needs.

How much can you keep before paying for care and what is the savings threshold for care home fees?

To protect your assets and avoid care fees, it is important to ensure that your savings are under these means-tested limits:

  • England: £23,250
  • Wales: £24,000 for home care or £50,000 for a care home
  • Scotland: £28,000
  • Northern Ireland: £23,250

If you have savings and assets above these thresholds, it is likely that you will have to pay for your care. If you share your home with a spouse or partner, then your individual circumstances will be considered by the local authority.

These thresholds include any savings. income, shares and pension. Your property will be counted as capital after 12 weeks if you move into a care home on a long-term basis, but not if your spouse or partner continues to live there. Once your savings fall below £14,250, only income is considered for means-testing purposes.

To make the most of your savings and ensure that they are sufficient to cover your care costs, it is advisable to seek financial advice. This can help you to make informed decisions about how to invest your savings and plan for your long-term care needs.

What approaches can I use to reduce the value of my capital and property?

People use various methods to lower their assets’ worth and avoid care home fees:

  • Buying a care home insurance with life cover (discuss with a financial advisor specialising in care home fees as exclusions may not protect you)
  • Repaying debts
  • Making legitimate life expenditures, like a family holiday
  • Setting up a Trust

Remember, disposing or ‘hiding’ assets to avoid means-testing by the council is risky. Councils are getting better at spotting those trying to dodge care home fees. If they suspect asset disposal, those funds will be included in the means-test.

Gifting assets is an option, provided it’s done legitimately and with sound financial advice. Reasons for gifting include:

  • Avoiding family disputes
  • Allowing the recipient to enjoy the gift while you’re alive
  • Expressing gratitude for support
  • Simplifying estate distribution after death
  • Transferring property maintenance responsibility
  • Preventing estate distribution delays upon death

But, gifting assets like property carries risks like bankruptcy, divorce, death, or financial troubles for the recipient.  See can I sell my house for a £1 to my son/daughter?

It’s crucial to balance potential risks and benefits before deciding on asset gifting. Seek professional financial and legal advice to ensure you’re following council rules.

sell house with tenants in situ
Professional advice is a must as deliberately depriving yourself of assets can lead to a lot of problems for your or your loved ones.

What counts towards deliberate deprivation of assets?

Deliberate deprivation of assets can involve more than just giving away your money and assets. It can also include any attempts to reduce your assets through certain actions such as:

  • Gifting money to someone, whether within or outside of your family
  • Transferring ownership of your home to a family member to exclude it from the financial assessment for care fees
  • Displaying large and unusual spending patterns or making large purchases that are out of character
  • Taking up a new hobby such as gambling with your money
  • Buying items to ‘hide money’, such as jewellery or a car, that may not normally be considered in a financial assessment.

What type of trusts can I use to pass on my property?

There are several types of trusts that will enable you to pass on your property to your loved ones. These can include Life Interest Trusts, Interest in Possession Trusts, and Protective Property Trusts.

Life Interest Trusts allow you to nominate a beneficiary, such as yourself or a family member, who has the legal right to receive income from or use the property named in the Trust.

Interest in Possession Trusts are similar to Life Interest Trusts, as they entitle the beneficiary to receive any income produced by the Trust as soon as it is produced. Protective Property Trusts, also known as “Property Trust wills,” allow you to set aside a portion of your property to pass on to loved ones.

It is important to speak with a Trust specialist, such as a solicitor, to determine which type of Trust is best for your specific circumstances.

Who is responsible for the Trust?

The trustees’ role is to manage the Trust according to its terms and make decisions about the Trust’s assets. These individuals could be appointed by the person who sets up the trust or by the Trust’s beneficiaries.

Commonly, children or close family members are named trustees.

Anyone over 18 and capable of responsibly managing the Trust’s assets can serve as a trustee. Sometimes, people think a professional trustee, like a solicitor or accountant, should be appointed. However, such professionals can charge high fees, leaving beneficiaries with less inheritance.

Choosing trustees is crucial as they play a key role in managing and administering the Trust.

Is equity release an option I should consider if I need to pay for my care?
Equity release is a financial scheme for homeowners over 55 in the UK, allowing them to free up some of their property's value while still living in it.

Is equity release an option I should consider if I need to pay for my care?

Equity release is a financial scheme for homeowners over 55 in the UK, allowing them to free up some of their property’s value while still living in it.

The released money can be used for care costs or any other needs. 

However, equity release is a long-term commitment that doesn’t require repayments. But, the interest rates and charges can mount up quickly, potentially leaving you in negative equity when selling or significantly reducing your inheritance.

Also, bear in mind that equity release could affect your eligibility for means-tested benefits.

Unfortunately, there are too many horror stories with equity release that can have a devastating financial impact. 

In our opinion, it maybe an easier option to sell and downsize to a small property or simply sell your property if you are ill.

How to not sell your property when going into care?

If you, your spouse/partner or certain others wish to remain in your home, selling to cover care costs isn’t necessary. You and any qualifying dependants have the right to stay indefinitely without being compelled to sell for care payment.

How can I stop my house from being sold if I go into care?

If you or your partner, or dependents (under 18), choose to stay in your home, there’s no need to sell it to fund care. You and any eligible dependants can continue living there without being obliged to sell to pay for care expenses.

Do I have to sell my mother's house to pay for her care
You and any eligible dependants can continue living there without being obliged to sell to pay for care expenses.

Do I have to sell my mother's house to pay for her care?

Typically, costs must be repaid within set timeframes, with added fees and interest. This may allow some to avoid selling their home initially or entirely. If you disagree with a local authority including a home in a care cost financial assessment, you can complain.

Can I put my house in trust to avoid care home fees?

It depends on your circumstances as the council may deem it as a deliberate deprivation of assets.  Get a solicitor who specialises in Trusts to give you professional advice.

What happens if you are in a care home and run out of money?

If you run out of money then your local authority will conduct a means-tested assessment and is likely to fund your care.

What is the 7 year rule for care home fees
You can remain in the property and avoid inheritance tax if you pay market rent.

What is the 7 year rule for care home fees?

Many individuals assume that the deprivation of assets rule doesn’t apply to capital they disposed of over seven years ago. However, there’s no such rule in existence.

Can I gift my house to my son and still live in it?

You can remain in the property and avoid inheritance tax if you pay market rent. However, your son may have to pay income tax on this income. Also, your son has the legal right to evict you.

Can I put my house in my children's name?

Gifting property to your children is a common method of transferring property ownership, often done to lessen the impact of inheritance tax.

However, it’s crucial to bear in mind that such gifting can have financial and other implications.

Selling house to pay for care home fees?

If you have time and finances on your side, it is best to consult with financial and legal advisors regarding setting up a Trust to safeguard your assets. 

The cost of such advice can easily run into thousands of pounds – with no guarantee that the council will not treat your arrangement as a deliberate deprivation of assets.

One option that is open to you is to sell your home for cash to pay for care home fees.  Property Saviours are sympathetic and can make you a fair cash offer for your home. 

We will complete the purchase within your timescale – whether it is a couple of weeks or months.  We will also release a cash advance should you require it to secure a care home place.  There are no fees to be paid and we will pay £1,500 towards your legal fees.

If you’d like to have a confidential chat, fill in our enquiry form for a free call back.

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