Updated: Jul 7, 2020
Life is about balance.
We know that you want to make sure that your family benefit from your estate but have you also considered that you may need care in the future and that this care will need to be paid for?
We are often asked “how can I stop my home being sold to pay for care?” or “how can I avoid paying for care?”
Usually the answer to this question is you cannot, and this is understandably disappointing.
After all, you have worked hard all of your lives, paid your taxes, only to now be told that it may all be taken to pay for your care.
You may have been told use a trust for asset protection (an asset protection trust) but these are often overturned by the local authority as they are classed as deliberate deprivation.
The same can be said for gifting your house to your children.
However, few people stop and think what it may mean to have the local authority fund your care?
When will the Council contribute towards my care costs?
If you have assets (money, investments or property) worth less than £14,250 then any care that you may need will be funded by your local authority.
If your assets are worth somewhere between £14,250 and £23,250 then you will pay something towards your care and so will the local authority.
If you have more than £23,250 then you will be 100% responsible for paying for your care.
If the local council is paying some or all of your care costs, you can choose your care home, but this is subject to certain conditions:
the home chosen is suitable to meet your assessed needs
it doesn’t cost more than the local council would expect for this type of accommodation
the provider is willing to enter into a contract on the local council's usual terms the care home is within the UK.
A government study from 2017 found that the average cost for a self-funder in 2016 was £846 per week (nearly £44,000 per year), while Local Authorities on average paid £621 per week- a rather large shortfall!
So, what happens if the care home that is best for you is out of the price range of the local authority?
Either, your family is asked to make a top up payment or you have to select somewhere else. This could leave you and your family to make a difficult choice between comfort and cost.
There has been some government discussion about introducing a cap on the amount of care fees payable but this has not been implemented and is not likely to any time soon.
How can I have my cake AND eat it?
There is a way that you can pass 50% of the value of your home to your children and use the other half to pay for your care. This is what happens when you have a Property Protection Will.
If you own your property with another person (such as your spouse), you can use a Property Protection Will to safeguard 50% of the value of your property from care fees, ensuring that it will pass to your children (or whoever you choose).
This also means that 50% of the value of the property can be used to fund your care. This gives you and your family the freedom to choose the care provider that is best for you and in the right location.
You may need to change the way your property is owned into tenants in common. This just means that each co-owner owns a defined share in the property- usually 50% each. You can read more about the difference between tenants in common and joint tenants here.
The process of setting up a Property Protection Will is straightforward:
Book an appointment with us, we will have a look at your circumstances and see what is best for you and your family. This can be at your home, in our office or via video call.
We will take all the details we need to draft your Will. We will only take these details when you are ready.
We will check your property deeds with the Land Registry, if you are not already tenants in common then they will need to be updated.
We will send a draft Will for you to read and approve.
We will visit you at home (if possible) and to sign and witness your Will. We will also bring Land Registry forms, if necessary.
Payment is due at when the Wills are signed (£300 for two Property Protection Wills or £180 for one)
We can store your Will, for free, or you can keep it somewhere safe at home.
You can read the story of how a Property Protection Will helped Mr and Mrs Smith save £150,000 in care fees, ensuring their family still received some inheritance here.
So many people are focused on how they can they can avoid paying for care that they forget to stop and think about what this may mean for them and their family.
Fortunately, there is a way that you can ensure that, if you do need care, that you have the freedom to choose where you are cared for as well as making sure your family receive some inheritance.
If you want to discuss making a Property Protection Will, then please get in touch by filling in our contact form here. One of our legal advisors will then call you to answer any questions you have or book you in for an appointment.