Several clients enquire about protecting their assets from nursing home fees should one half of the couple go into nursing care. There is a common misconception that this can be done simply by altering the ownership of the property from Joint Tenants to Tenants in Common. A BBC program called ‘Can’t take it with you’ looks at this issue and it is also been discussed in various radio shows which may have prompted the issue.
Wills and Tax Solicitor, Kelly Taylor, helps clients to arrange their finances to deal most effectively with this situation. While she is glad that the media is highlighting this issue, she is concerned that a key point is not being clarified adequately within the coverage.
Kelly says “Changing the ownership of property is one step of the process but this has no effect at all unless the couple’s wills are also written to clarify the couple’s wishes and actually ensure the assets are protected rather than being passed to each other. Most people that ask about this are now aware that they need to also do up to date Wills. Several people also think that this is a new concept, which causes some concern. This is also a misconception as it is something we have always helped clients with.”
The growing interest in this area may be due to the primary concern of many people switching from saving on inheritance tax, which follows the change in the law a few years ago to allow double inheritance tax bands for married couples. At the same time care fees are reportedly rising and therefore focus may have now turned to protecting assets and property against nursing home fees instead.
While one spouse remains in the property as the couple’s ‘principle residence’ it will not be taken into consideration for care home fees. However if one spouse dies, and the house then belongs solely to the other spouse, the house would probably have to be considered if they are in care or go into care at a later stage.
Kelly explains “A will can help to protect assets by using a life interest trust (also known as an asset protection trust) within the will. It is important to take legal advice on this because this type of trust does not have any Inheritance tax advantages. However, it does allow for the survivor of a couple to use the income from the capital in their spouse’s half share of the property during the rest of their lifetime, whilst ring-fencing the actual capital. This means that it passes to other people, specified in the will, when the surviving spouse dies.”
For a free initial meeting please call 01202 499255 and Kelly or a member of her team will be happy to discuss any questions you may have.