Protecting my home from Care Fees

Estate Planning Tips & Tricks

Are you, or do you know someone that is considering transferring their home to their children??

People are looking at ways to protect their homes from being sold to pay for their care. One example of this is where people transfer their home to their children during their lifetime.

I have spoken to a number of people recently that have done this, believing it to be the only option.

Although this solution seems to be the clever thing to do, it comes with danger warnings.

There are a number of issues that need to be taken into account if you are thinking about this solution.

(1) If your Son / Daughter gets into financial hardship, the property could be at risk.

(2) Once you have transferred the property to your Son / Daughter if they get divorced part of the property could be at risk.

(3) Capital Gains Tax, as this isn't the principal residence of your son/daughter when they come to sell the property capital gains will need to be paid as it would be classed as a second home.

(4) If your son or daughter wanted to purchase a new property they would pay an extra 3% in stamp duty because they own another property.

All is not lost though there is a better way.

Firstly if a property is owned jointly with another person and they are both still alive simply severing the tenancy and owning the property tenants in common 50-50 and setting up a trust to hold the individual half's ensures the property will not be sold to pay for care if one of them passes. (No need to transfer to the children)

If you own property solely, so tenants in common isn't an option, you can transfer the property into a PPPT Probate Preservation Plus Trust today. This protects the property and ensures it passes to your intended beneficiaries and isn't lost to future care fees. There are time limits associated with this solution so it's not classed as deprivation.

Both these solutions keep the property under your control, which also means that no capital gains are paid on disposal, and no part of the property is lost if your children get divorced or get into financial hardship in the future. (Result!!!)

If you would like to know more about these two solutions to protecting your home please reach out and let's have a chat.