Nobody likes to think about getting old, but it is certainly worth thinking about if you value your home.
That’s because if you end up going into care and you don’t have a plan, your house could very well be sold by the local council to pay for your care fees.
Let’s say you own a home jointly with your partner and you live there until one of you dies. The surviving partner continues to live in the house until they have to go into a care home run by the local authority.
At that point, the local authority will assess the surviving partner for care fees. If their capital and savings are worth more than £23,250, they will have to fund their own care.
Given the value of even the most modest property today, it’s highly likely that the estate of any home owner is worth more than £23,250. So why is the threshold so low?
“Councils are struggling to pay the bills and need money to pay for care fees,” explains Mike Pugh of Maplebrook Wills. “The way they get it is to place a charge on the property, which is paid when the house is sold. Or you may be required to sell the house immediately to raise the cash.”
Money raised from the sale of the house will fund your care until your savings get down to £23,250. That won’t leave much of an inheritance for your loved ones – the family you’ve worked so hard to benefit.
Protect your house
Fortunately, you can find a way around this with the help of a professional will writing service such as Maplebrook Wills.
It’s a two-step process. First, you need to change the ownership of your property with HM Land Registry. Rather than jointly owning the whole property – known as joint tenants – you become tenants in common. Each partner then owns 50 per cent of the property.
The second step is for each partner to get separate wills. Inside each will is placed a legal entity called a trust. When one partner passes away, half of the house is now owned by the trust.
Every trust is administered by a set of trustees, and in this case, the trustees are the surviving partner and children.
Says Pugh: “It’s an elegant solution that shields half of the house from being assessed for care fees. There are other solutions to shield the whole property, though these are a little more expensive.”
It’s almost certain that the situation won’t get any better over time. The UK’s fastest-growing age group comprises those aged over 85. Councils will face even more pressure on budgets, leaving them with little choice but to continue to sell people’s homes.
In addition, the price of care is rising rapidly. The average care home fee is now £33,000 a year, according to a 2017 survey conducted by Prestige Nursing and Care. That’s up 9.6% from 2016 – double the previous year’s increase.
“Unless you’re putting aside £2,000 a week to pay for future care fees, which most of us can’t afford, you’ll need to have some paperwork in place in case you ever need it,” says Pugh.