There is a common feeling of indignation amongst families when the family home has to be sold to pay for care fees. Undoubtedly, elderly clients often want to avoid the risk of contributing to the cost of long term care as this can deplete assets and savings.
Putting the family home into the names of children is tempting, but time and again we as Solicitors have to warn clients of the risks of doing so. The four classic dangers include the premature death of a child; the divorce of a child; the bankruptcy of a child and a family fall-out.
Furthermore, clients need to be aware that any deliberate deprivation of assets can be challenged by the Local Authority, who have powers to make the elderly parent bankrupt and apply to have the gift set aside.
Rather than making a gift of a home to children, clients might want to consider other options that are available.
If both elderly parents are living, then they could consider structuring their Wills in such a way, that when the first spouse dies, their half share in the property passes into a trust, rather than giving all of their interest in the property to the surviving spouse. The terms of the trust allow the surviving spouse to continue residing in the property or in a replacement property should the surviving spouse wish to move.
This obviously does not protect the whole value of the property from being available to meet care charges. It does however, usually protect a half share. This is because the surviving spouse has the right to occupy the property but does not own the half share absolutely. The surviving spouse would still have their own half interest in the property which would be available to pay care charges. However, protecting half of the value, in a reasonably risk free-way, is more attractive than losing the whole value of the property to long term care charges.
We advise that you always seek legal advice if you are considering such a gift to a child(ren).
If you would like to speak to one of our specialist Solicitors about this, please contact Ceri Davies, Adam Bruce or Luned Voyle at Ungoed-Thomas & King Solicitors on telephone number 01267 237441 for further advice.