Safeguarding your home and assets from care costs

The time when an elderly person needs to go into residential care is often a huge strain on family members. Illness or infirmity may have forced a sudden change in circumstances and time may be short.

Under the Community Care Act 1990, local councils have the right, by law, to force the sale of a family home to pay for care costs or to take a charge against a property to be repaid on the eventual sale of the home. This could result in very little being left for the surviving family.

You and your spouse or civil partner should each make a provision in your Wills ensuring that, upon the first death, the deceased’s half of the property is placed in trust for your children or other beneficiaries instead of passing directly to the survivor. However, you need to understand the powers that local authorities have to include in the means testing assessment assets that they consider have been subject to ‘deliberate deprivation’. This occurs when a resident transfers an asset out of their possession in order to achieve a better position that enables them to obtain assistance.
A trust arrangement keeps any designated property owned by the deceased away from the council’s reach.

At the same time it allows the surviving spouse or civil partner to continue benefiting from the assets, which may include the family home. On the death of the remaining member of the couple, the assets owned by the trust, together with whatever is left of the assets of the second spouse or civil partner, can be given to the surviving family.

The majority of people own their homes jointly which means that, on first death, the survivor would then own 100 per cent of the full property value. By changing the way you own your home to what is known as ‘Tenants In Common’, combined with the appropriate trust planning, this could effectively ensure that your property is fully protected should either of you enter into care. In addition, by changing the way your assets are invested and held, this could also ensure that your cash or liquid assets are fully protected from future long-term care costs.