The spectre of care home fees can loom large for older couples. Richard Barlow explains how you can stop some of the value in your property being swallowed up…
My wife and I are about to make new wills. As we own our house jointly, we’re worried it will be at risk if either of us needs residential care in the future. Is there anything we can do to ensure our loved ones have something to inherit?
There are two ways a property can be owned by more than one person, as ‘joint tenants’ or ‘tenants in common’ and you need to understand which category you fall into.
If you are joint tenants, the house will automatically pass to the surviving owner upon the first death, regardless of anything to the contrary stated in that person’s will. If you hold the property as tenants in common, each person’s share will be dealt with in accordance with their wishes and does not automatically pass to the surviving owner.
If you and your wife make wills that leave everything to each other upon the first death, the surviving spouse will inherit the whole property, regardless of how your ownership is set up. However, if they then enter a nursing home, the entire asset will be taken into account when an assessment for the payment of fees is carried out.
Can we structure our new wills to mitigate this risk?
In these circumstances, we can look at building life interest or property trusts into your wills.
In order for a trust to work, you need to own your home as tenants in common, but we can deal with that for you, if you are unsure it is the case.
Your wills will then state that on the first death, that person’s share falls into a trust, which gives the surviving spouse the right to live in the property for the rest of his/her life (hence ‘life interest) and it cannot be sold without their consent.
The surviving spouse retains his/her share in the property and the trust allows them to sell it, if necessary and use the proceeds to buy another house to be held on the same terms.
A trust usually ends when the surviving spouse dies. The share of the property held within it then passes to your nominated beneficiaries, ensuring your loved ones receive at least half the capital from the asset.
So how does a trust help with care home fees?
Essentially, putting a trust into your wills means that if after the first death, the surviving spouse needs residential care at some point, the deceased’s share does not pass into their estate and cannot be taken into account against a nursing home fee assessment.
If you are interested in making will trusts, I recommend speaking to an expert solicitor in detail. We will assess your situation and discuss the options available in relation to your home. For example, you may also wish to consider lifetime gifting or placing the whole property into trust.
To find out more about life interest and property trusts, why not book a free 30-minute consultation with one of our probate specialists? Telephone (0114) 218 4000, email: email@example.com or complete this form.