Can we avoid the means test for care fees ?
Q My wife and I are about to update our wills to check that the Inheritance Tax side is fully up to date.
Recently, a friend mentioned a way to avoid the problem of having to sell one's property to pay for nursing home care and we are wondering if this is true. The scenario is when one partner in a marriage dies and the surviving partner goes into a nursing home. If the survivor cannot pay for the nursing home care, any property owned would have to be sold to pay for it.
We are told that if the couple divide ownership of the property between themselves and their child, then when the surviving person goes into a nursing home, the property cannot be sold because it is now owned between the surviving partner and a grown-up child. How true is this, how would one set this up and are there any drawbacks/problems ?
A If you were to transfer the ownership of your property from a joint tenancy to tenants in common, where you and your wife both separately own 50 per cent of it, on death you can each leave your share of the property to beneficiaries other than your partner. If this were to happen, if the surviving partner then needs to move into a care home, only half the value of the property would be counted in the means test.
The council cannot force anyone to sell their home to pay for care; however, if the property is counted and solely held, they can apply a 'charge' to recover the care costs when it is sold. In the case of jointly owned property, they cannot place a 'charge' on the property but can apply a less effective 'caution' with the Land Registry to be settled when the property eventually sells.
You should consult a lawyer before considering this action because there are possible drawbacks. For example, if 50 per cent of the property has passed to the beneficiaries, there is the risk of not having full control of the proceeds should the surviving partner wish to use the money to to move to another property, or maybe release some of the equity to help financially. There is also a risk that it could be called upon as an asset of the beneficiary if they were to divorce or become bankrupt.
There is only a slight chance that the surviving partner would need to move into a care home, so you would have to weigh up 'pros and cons' carefully. For further information, please see FirstStop Factsheet 3: 'Care Home Fees and Treatment of Couples'.
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