Care Home Protection

The technical name for our care home protection product is called an Interest in Possession Trust. These trusts are designed to protect assets such as property, savings and possessions against re-marriage or the long-term effects of care fees.

They allow the person making the trust to ringfence assets for a beneficiary for their lifetime (called the Life Tenant) and then to transfer them to chosen beneficiaries, ie their children, after the Life Tenant has died, or other conditions have been met such as a remarriage.

The Case

Mr and Mrs X contacted Kwil to review their Mirror Wills. They made their Wills in the 1980s, not long after their children were born, and they had not reviewed them since.

They were both now in their early seventies, with two grown up children and five grandchildren. They jointly owned their house, worth around £200,000 with no mortgage attached, and had other joint assets made up of ISA’s and bank accounts of about £75,000. They were worried about the impact of care home fees on their estate and how this would affect their children’s inheritance. They were both healthy but were worried about the future.

How Kwil helped

Kwil arranged for Mr and Mrs X to have a meeting with one of their SRA regulated solicitors to review their existing will and take details about their current circumstances.

Mr and Mrs X mentioned that friends had told them they should transfer their property into their children’s names. We advised that there were several reasons why this would not achieve what they wanted and why it was a risk:

• If you transfer your property to your children whilst you still live there, Local Authorities can claim deliberate deprivation of assets and still take into account your whole property when assessing you for the cost of your care.
• As soon as you transfer your property you immediately lose all rights over it, so if one of the children should become bankrupt, get divorced or die then you could potentially risk losing your home.

Instead of a property transfer, Kwil recommended that they set up Life Interest Trust Wills. To do this, they would have change the tenancy on their property from Joint Tenancy to Tenants in Common. As Tenants in Common, they would each own a 50% share of the property. This would allow Mr and Mrs X to add a Life Interest Trust to their wills. By making a Life Interest Trust, the first one to pass away would put their 50% share of the house into the Trust as a gift for the children. The survivor would have the right to live in the property for the rest of their life, or if they decided they wanted to move or downsize then an alternative property could be purchased on the same terms.

The Life Interest Trust would also offer protection for their children’s inheritance. If Mr or Mrs X needed to go into a care home in the future, the Local Authority could only use half of the property to assess them for care home fees, meaning the other 50% was safe.

Outcome

Mr and Mrs X were delighted that they had taken advantage of our free Will review. Their wills were updated, and they were comforted that they had done as much as possible to ensure their estate passed to their children and grandchildren in a simple and effective way. Kwil advised them that they should review their wills every 3 years to take into account any changes in circumstances and arranged to follow up with them in due course.