One of the most common concerns that clients have, when instructing me to prepare their Wills, is how they can avoid their estate being eaten away by care home fees should they have to go into care for a lengthy period of time. They hate the idea of the assets they have built up over their lifetime, and which they intended to leave to their children, being taken away from them. They are particularly concerned about protecting the family home in these circumstances.
The problem is that you do not know if, when and for how long you are going to be in care.
The good news is that, statistically, it is still unlikely that you will need to go into care. Less than 15% of people over the age of 85 are in care at any given time, although this figure is trending upwards as life expectancy increases, and the average length of time that a person will be in care will be slightly more than 2 years. This means that with care home fees being at least £1,000.00 per week, a two year stay in care could cost in the region of £100,000.00 to £120,000.00. Even then, costs will initially be taken from any income you are receiving, including your state pension, attendance allowance and any other private pensions, followed by any savings you hold, before attention is turned to the family home.
Despite this, there is naturally cause for concern. Is there a way of protecting the family home? If you are a couple who jointly own your home you could set up a Protective Property Trust in your wills. The simplest explanation of how this works is that, on the first death, rather than the property passing into the sole ownership of the survivor, the deceased’s share will go into a trust, often held for the benefit of the children, with the survivor having a right to live there for the rest of their life. If the survivor then has to go into care for any period of time, the half of the property held in trust is protected and will not be at risk.
It becomes more complicated once you are a single person owning the property outright, so you really should be thinking of Protective Property Trusts while you are both still alive. In addition, this is something you should be thinking about before either of you is likely to need care, as that way it is harder for there to be any suggestion that you created the trusts solely for the purpose of avoiding care fees.
If you are a single person who owns their own home outright, you may wish to consider setting up a lifetime discretionary trust to protect your home, but such trusts are extremely complicated and result in you no longer fully owning the property. This could make transferring, selling or re-mortgaging the property in the future more difficult.
In fact, any protective measure you take regarding your property will result in you losing some level of control over it, so it is important to make a decision that is right for your particular circumstances. Take into account the statistics I have quoted above and have regard to your own health and family history. Balance the need to protect your estate against having comfort and control of your assets in your later life.
If you would like to find out more about Protective Property Trusts, to see whether they are suitable for you, or if you are considering making your Wills, please contact me for a free initial consultation.