Yes the law regarding schemes such as this, along with the care home/local authority funding rules are complicated.
Anyone considering placing their property into a trust, should seek legal advice before doing so.
Putting homes into trusts is becoming an increasingly frequent means deployed by families in an effort to protect inheritance. However, as this article highlights, this is not a guaranteed outcome.
There is nothing wrong with advance inheritance planning. But it should be supplemented with legal advice.
As funding becomes even tighter and tougher in an ageing population, it is likely that Local Authorities will begin to scrutinise and then subsequently challenge efforts that have been made to move assets out of reach.
In 2013 in an article posted by the Guardian it was suggested that "In the next two decades, the numbers of people aged 85 and over will more than double from 1.53 to 3.25 million. These people are much more substantial users of health and both formal and informal social care services."
Transfers made shortly before (or after) an elderly relative goes into a care home are those at most risk of being opened up to scrutiny. What this means is that the Local Authority could go behind the trust to include the value of the property as part of its means assessment for care home fees.
Ideally, steps should be taken to protect inheritance, or make any gifts/disposals many years prior to reaching the stage of needing to go into a care home. However, for most of us, the issue does not arise until shortly before an elderly relative needs to go into a social care environment. By this point it is too late to contemplate disposing of assets, otherwise the potential steps the local authority can take could be severe.
The risk that families take when disposing of money and assets is that the local authority could pursue them.
Whilst there is always the anomaly over whether the local authority can prove whether the disposal is deliberate, the fact that monies and assets are dissipated shorty before, or after an elderly relative has entered into care is powerfully persuasive.
Not only is there the possibility that the local authority will not pay for the care home fees once the threshold reaches £23,250, but also the local authority could choose to disregard any disposals made when looking at the merit threshold.
If this issue affects you, or you wish to speak to someone about this call Sophie Samani on 0121 214 1215 (firstname.lastname@example.org).
Trusts can enable older people to pass ownership of their property to loved ones – such as their children – without giving up their right to carry on living in it. Should they later need residential care, the property would no longer be included in the local authority’s means test because even though they still live there, it is not legally theirs. Currently people requiring care, who live alone, need to pay for care themselves if they have assets worth more than £23,250. This includes the value of any savings, investments and their home.