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Protecting Family Home From Nursing Home Fees is Number One Concern for Older People- 18/01/2011
Having to sell the family home to pay for nursing home fees is now the number one concern for most older people, according to a survey by West Midlands law firm FBC Manby Bowdler LLP.
“Considering that a local authority can take into account 100% of people’s assets over £23,250 to meet the cost of residential care, it is little surprise that people are very worried,” says Maxine Davies, a private client solicitor in FBC Manby Bowdler’s Wolverhampton office.
However, according to Mrs Davies, the survey showed that most people are unaware of just how difficult it can be to protect their family home.
She says: “Most people do not realise that there is no time limit for local authorities when it comes to assessing assets, such as the family home, which they believe were deliberately disposed of, when calculating nursing home fees.
“If a local authority can prove that an asset was sold, or given away, primarily to avoid paying nursing home fees, then it can still count this when demanding a contribution from the nursing home resident and their family, no matter when the asset was disposed of.
“Many people wrongly believe that there is a seven year cut off period when it comes to disposing of assets, but this is only in relation to inheritance tax. There is no time limit on how far back a local authority can look if it suspects someone of deliberately depriving themselves of an asset, and they can explore all sorts of avenues to do this, even investigating bank accounts and asking neighbours for evidence. So parents simply cannot sign over the family home to their children.”
According to Mrs Davies, the answer is to take into account the possibility of requiring long term residential care as part of an estate planning exercise, which includes reviewing wills, powers of attorney, equalisation of assets between spouses or civil partners and, possibly the establishment of a trust.
“We can consider all aspects of putting the family home in trust, which should, for example, protect half of the house for the children, should one of their parents die and the other end up in a care home,” says Mrs Davies, who is a member of STEP, the Society of Trust and Estate Practitioners.
“The review should also consider inheritance tax planning and investments, including any assets invested in a business which could be brought into account in a future financial assessment for nursing home fees. Consideration can then be given to changing partnership deeds or company articles accordingly.
“It is vital that this review be completed long before there is any possibility of residential care being required, or dependent on the outcome, in itself it could possibly be viewed as a deliberate deprivation of assets to avoid nursing home fees. But, as long as that is not the main motivation, then clients should be protected in the future.
“People need to be aware that this is a complicated and ever changing area of the law, and should ensure they seek legal advice from an experienced practitioner,” concludes Mrs Davies.
With 36 partners, FBC Manby Bowdler is one of the largest law firms in the West Midlands. The firm has offices in Wolverhampton, Willenhall, Telford, Shrewsbury and Bridgnorth.