We’ve all heard the traumatic stories of people being forced to sell their family homes to pay for astronomical care fees. The subject of elderly care, writing a will and what happens to our estate when we die is never an easy one, but with just a bit of planning, unnecessary fees and a lot of stress can be avoided.
Sam Francis of Assured Wills is an expert in this field and helps families to protect their estates to ensure they can pass as much as possible onto their families.
He says: “Fees for end-of-life care are affecting more ordinary families than ever before. In the past, few gave much thought to having to pay for care fees as they were unlikely to live long enough for this to be a problem. Nowadays, the burden for financing social care has now fallen to the individual who requires it, and the local authority where they live.
“The average cost of a week’s care in a residential home is now nearly £1,000, so it doesn’t take long before you lose significant wealth to pay for nursing care.”
- If your estate is below £14,520, then the local authority will pay for your care.
- If you have between £14,250 and £23,250, then you will pay a proportion of the cost of your care on a sliding scale.
- However, any savings, investments and assets over £23,250 mean that you will pay 100% of your own care should you require it.
- If you own your home and, by taking residential care, you will be leaving it empty, then the value of the house will be included as an asset that can be sold to pay for the care.
According to Mr Francis there are three important steps to protecting your estate and your home when you die. These are perfectly legal and accepted in estate planning.
The first is to ‘sever the tenancy’. Usually people buy together as a Joint Tenancy meaning they own the property as a couple. This meant that should either of them die, the remaining partner will own the whole property.
If you sever the tenancy means each has a 50% share and if one partner dies, they can pass their share in their will to someone other than the surviving spouse. The process of Severing the Tenancy is straightforward and involves each of them signing a written statement and submitting a form to the Land Registry.
The second step is to make sure that on the first death, the property passes into a protective will trust. This is a trust such as a Property Protection Trust (PPT) which guarantees a right of residence to the survivor so they can continue to live in the property. And on the second death, it will benefit the children and grandchildren. As a side-effect of this trust, it is highly likely that the entire value of the home would not be included in an assessment for care fees.
A great advantage of this type of trust is that should either remarry after their spouse’s death then the home would be protected from forming part of the new marital assets which means that any new husband or wife would not have any legal right to inherit any part of the family home that is in the Trust. Anything tied up in the Trust would also be protected from divorce or bankruptcy.
Mr Francis added: “We have recently worked with a family where the husband died very suddenly and unexpectedly and everything was left to his wife. Unfortunately, she suffered a stroke very soon afterwards and needed residential care.
“The local authority decided that she needed to pay all of her care fees and that the family home should be sold to pay for this. They have worked so hard all of their lives and wanted to pass on their inheritance to their children so they could get onto the housing ladder or pay for university.
“The tragedy is that others in the same care home have constructed their wills differently when both partners were fit and well so that half of the house passed into a protective trust and meant that only savings were used to pay for care. When they had nearly run out of saving, the state stepped in and covered the cost of care. It seems so unfair and a real catalyst to ensure everyone has proper advice on getting their affairs in order.”
For more information and to find out more about how to plan to avoid care fee costs, visit www.samfranciswillsoxford.co.uk