A recent survey showed that average care home fees are now £25,000 a year, and as we get older the risk of needing residential care increases: a recent study showed that there are over 9.5 million people in the UK aged 65-74, and over one million people aged 85 or more, 20.7 per cent of whom will need residential care.
Media headlines have focused on the fact that people may need to sell their homes to fund care home fees. But a relatively minor change when drafting your will can safeguard half the value of your property from care home fees and protect the asset for your loved ones, so they have something to inherit.
For the cost of less than one week’s residential home fees, a life interest trust (sometimes referred to as a family house trust) in your will can ring fence your half share of the property if your surviving spouse needs to go into care after you have died.
Your spouse or partner can be given the right to continue to live in the property, or they can move or downsize – but that share is protected from care fees.
If the property is sold and the surviving partner needs to go into a home, the proceeds of the sale can be invested to create an income and the capital is protected.
It is also possible to build in bespoke variations to deal with individual circumstances and the needs of beneficiaries.
If the house is owned jointly, then you will need to ensure that it is owned in an appropriate way, as tenants in common and not joint tenants. This is very easy to change at little cost.
You can also choose to put your home into a trust in your lifetime, but you need to tread carefully for many reasons, not least because this strategy could be challenged – especially if, at the time of putting the home into a trust, you are likely to need to go into a care home.
