4 days ago
Could I really lose my home to care fees?
We will all have heard that care fees in later life can place us at risk of losing our home, but do we really understand why or how that can happen? Have we given the issue the thought and consideration it merits? Probably not.
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The chance of you ending up in care is constantly rising. According to the Office for National Statistics it is currently estimated that one in four people over the age of 60 will end their days in care. It is predicted that this will rise to one in three by 2030.
The cost of care can be up to £75,000 annually. When you consider the threshold for council support with fees is set at just £32,750, with your home included as one of your assets, the threat to your property is clear.
Although you cannot deliberately deprive the local authority of care fees, there are legal ways to safeguard your home from being taken to cover care home fees, and that's through Protected Property Trusts (PPT) or Transfers.
In basic terms, setting up a Trust or Transfer lets you give ownership of assets to someone else in order to protect them, manage them or distribute them according to your wishes on your death. This can protect your property from being taken from you to pay care home fees.
Tony Marchi, principal at ILAWS Scotland, says many people underestimate the threat to their property. As estate planners, ILAWS are experts at advising customers on their best course of action and put in place PPTs and Transfers for hundreds of clients every year.
However, Tony and his team also receive calls from people who have left it too late to put the appropriate protection in place. There is nothing they can do once you or your spouse requires residential care.
That is why it so important to take action now to mitigate the risk to your biggest asset.
'It's a misconception that you can't lose your house, or that you will lose half your house,' said Tony. 'That is not the case. If you jointly own a home with your partner or spouse and one of you goes into care, you can lose the whole house.
'Usually when people joint own a property in Scotland, they own it with what is called a survivorship clause in there. That means when one of them dies, immediately the other person becomes the sole owner.
'For example, if a husband goes into care and he owns a house jointly with his wife, if she dies first, he will end up being in care and owning the whole house. That's how joint ownership works – your Will isn't even enough to change that; your Will would not supersede the title deeds.'
More than ever before our children are relying on their inheritance for financial security, but without putting in place a PPT or Transfer that inheritance isn't guaranteed.
'You spend a lifetime getting to the position of owning your property outright,' explained Tony. 'Possibly one of the reasons you wanted to buy your house was to pass it onto your children, but you can lose it so easily and so quickly.
'Time is of the essence, do it now and then you can breathe a sigh of relief – just like when you paid your mortgage off – but with the knowledge that your property is safe.'
