Protecting the family home against care fees

For most married couples their principal asset is the family home.

In an increasing number of cases the family home has to be used to finance the care that often becomes necessary in old age, either in a residential home or a nursing home. With care fees starting at around £2,000 per month, the capital can soon decline, leaving a significantly reduced inheritance for the children. Such a scenario is unwelcome to parents who wish to preserve their estate in order to pass it on to their children.

imagereaderThe family home will only be taken into account in a financial assessment when the survivor of the couple requires long term care or both of them do. The reason for this is that the family home is disregarded in any financial assessment provided that the other spouse continues to live in the property.

Correct use of Wills can help reduce the value of a property that can be taken into consideration and help preserve the family home for the next generation.

The following steps need to be taken:

  • Where a property is owned jointly, there are two ways in which it can be owned, either as ‘joint tenant’s or as ‘tenants in common’. Where a property is owned as joint tenants the deceased’s interest in the property passes automatically to the survivor upon the first death.Where they own the property as tenants in common they each have a defined interest in the property. They are therefore able to leave their interest in the property under the terms of their respective Wills. A couple should therefore alter the ownership of their property to tenants in common. If the property is in the sole ownership of one spouse, which is sometimes the case, it should be transferred into their joint names and held as tenants in common.
  • Wills are made giving each other a right to live in the property in respect of their individual share therein. Upon the first death, the survivor will continue to own their half share interest in the property. He or she will also have a right to live in the property by virtue of the terms of the will of the first one to die. Their continued residence in the property will therefore be secure.In the event that the survivor later goes into a nursing or residential home, the right to reside in the half-share interest of the first to die will cease. The half share interest in the property will then pass to the children. It will not form part of the estate of the survivor. As such it will not be taken into account in any financial assessment of him or her.

By adopting the above steps, a maximum of half of the value of the property can be included in any financial assessments, protecting a considerable amount of money and covering the costs of arranging the wills hundreds of times over.

Please contact us for more information on this valuable planning opportunity.

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