Trust is a rare commodity these days, especially when it comes to our money and property. Choosing the right people to trust with our assets is not always difficult but can cause problems.
Because if we don’t plan correctly and don’t plan ahead, the choice of who to trust with our assets could be taken away from us and placed in the hands of the government or the local authority.
To Trust or not to Trust
To Trust, or not to Trust, that is the question:
Whether ’tis Nobler in the mind to suffer.
The whims and choices of outrageous Authorities,
Or to take Action against a Sea of troubles,
And by making a Trust end them: to die, to sleep
Who would you rather give your money and your home to – your family or your local authority? If you find yourself in need of support from either bad debt, needing specialist care, having to go in to a care home, or if you pass away, then you may not get a choice.
This can be especially true for vulnerable people. If you find yourself needing to go into care, the local authority may take your savings and your home away from you to pay for your care.
So perhaps the better question is Would you trust your local authority with your assets?
Paying for Care
The simple truth is that if you find yourself faced with having to go into residential care then your home is at risk. If you own a house then it is an asset that is taken into account when the local authority means-tests you to see if you have to contribute towards your care costs.
This is true even if you own your house with your spouse or partner as you probably own it as Joint Beneficial Tenants which means you both own the whole property. Should one of you pass away, then you still own the whole property. This means the local authority could sell it and use the funds to pay for your care.
Planning for Future Care
There are solutions though. Planning correctly for “what happens when…” is the most important. Planning correctly means you can protect your home from being taken into account when being means-tested by the local authority.
One simple and effective method of doing this is by “severing” the Joint Beneficial Tenancy (ie splitting the ownership into equal shares and becoming Tenants in Common) and putting a Life Interest Trust in place in your Will.
Care Home Fees and Trusts
There are a set of guidelines known as CRAG (Charges for Residential Accommodation Guide) and one clause in particular deals with property in this situation.
This basically means that where there is a property with a severed tenancy and a Life Interest Trust in the Will then as long as the property is not sold, the entire property could be taken as being outside of the net for means-testing.
Your Life Interest Trust
Many people don’t have and are completely unaware of Life Interest Trusts. These Trusts are a simple and effective way of planning for the protection of your home from future concerns, including potential future care home fees.
If you’d like to add this type of Trust to your Will, or if you don’t have a Will and want to have one drafted that includes this type of Trust protection, then contact us today to arrange for your initial consultation.
Mr & Mrs Alexander (not their real names) owned their home outright. Mr Alexander’s family had a history of dementia and he was concerned about what would happen to his should he need to go in to care. They also both expressed concerns over loosing the family home in such a case or when one of them passed away.
They contacted KGN Consultants and we arranged for them to put in place Mirror Wills with a Life Interest Trust and severed the tenancy on the property. Sadly Mrs Alexander passed away a short while later and Mr Alexander started suffering from dementia not long after that. Because of the Life Interest Trust, the family home was held to be outside consideration during means-testing and was able to be passed to the couple’s children as per their wishes in their Wills, when Mr Alexander passed away.