Rob Jobson

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Can I give my home to my children to avoid care fees?

Can I give my home to my children to avoid care fees?

 

One of the key topics throughout the general election was the funding of care in later life. This is certainly a political ‘hot potato’ as care funding is expensive at a time when we all know that the government is struggling with its deficits.

 

When advising on care fee funding, one of the most common questions is: “Can I give my house to my children to avoid care fees?” Robert Jobson, Partner in the Inheritance Protection Team at Gardner Leader LLP in Thatcham, discusses the main issues he considers when answering this question.

 

Paying for care

If your healthcare needs are substantial, then there is a chance you may qualify for NHS continuing care and not have to pay for your care. However, there are many criteria to be met for eligibility. If you don’t qualify and the value of your assets exceeds £23,250, then you will be obliged to fund your care. If the value of your assets is less than this, then the Local Authority will assist with your care costs.

 

Reservation of benefit

If you give your house away, but continue living in it, then you will be deemed to have a “reservation of benefit”. When the Local Authority assess your funds, they may treat you as still owning the property. Reservation of benefit can be avoided by paying your children a market rent. However, your children would then be taxed on that rental income.

 

Deprivation of assets

If you know you are likely to need care in the near future and give away assets, the Local Authority may assess you as having deprived yourself of assets solely to avoid care fees. They could then treat you as if you still own the asset you gave away.

 

Death, divorce & debt

If your children should die before you, divorce or fall into debt, their interest in your home could be affected thus potentially affecting your continued occupation.

 

Choice

A different perspective is that, although care fees can be expensive, if you have the funds you have the power to make a decision about the care you receive. If you have no funds then you are fully dependent on the support provided by the Local Authority.

 

Conclusion

I am always reluctant to advise clients to transfer their property to their children as the potential pitfalls often outweigh the likely benefits. However, in certain circumstances such an approach can be beneficial. My view is that if you are considering doing this, you must seek expert advice from a qualified professional before proceeding and be sure to consider the many other approaches to care fee planning which are available and which can work.

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