Long Term Care Planning
An issue of great concern to many clients is the possibility of their house having to be sold to pay for any future Long Term Care (LTC) needs. Consider the following:-
- Over 500,000 people are currently in nursing homes in England & Wales
- 5,000,000 people are receiving care at home from relatives or the local authority
- Over 40,000 houses are sold each year to pay the owners care bills
- The cost of just 1 year’s care could be anywhere between £30,000.00 to £45,000.00 depending on the level of accommodation
Based on these figures, it is easy to see how the whole value of your house could be lost in just a few years spent in residential care.
So what can be done within your Wills to avoid this? Firstly, any couple, married or not, should own their house as Tenants in Common rather than as Joint Tenants. This will give to each owner a specific 50% interest in the house.
Then, under the terms of their Wills, the first spouse/partner to die, will place their share of the house in a Trust, normally for the eventual benefit of their children. They will though, give to the surviving spouse/partner, the right to live in the house for the rest of their life. Should the survivor then require LTC, and they are assessed by the Local Authority as to the extent of their own assets, they will only be assessed as owning 50% of the house.
In addition, and provided that the Trustees of the Trust do not wish to sell their interest in the house, the value of the interest of the person entering LTC, under a recent Court ruling, would be the value that someone was willing to pay for a 50% share of the house – in real terms a nominal value. The effect is that almost the entire value of the property can be protected from LTC assessment, and the value protected for your chosen beneficiaries.
Wills in these terms have the ability of saving many thousands of pounds in LTC fees, as well as preserving the IHT situation. The surviving spouse would still be able to use both IHT allowances on their subsequent death.
