Reader Q: Can you be made to sell property in a trust to pay care home fees?

3 min Read Published: 08 May 2013

Get an answer to your financial question online Reader Question:

Can you be made to sell property held in trust to pay for care home fees?

My response:

Firstly, I would want to know why the trust was set up in the first place. If the trust was set up specifically to remove assets to avoid any means test then the local authority could make a challenge. Although there are various companies promoting  putting a property in trust as a means of avoiding care home fees, it is often unnecessary as the value of a property will be ignored for any of the following reasons:

  • the stay in a care home is temporary and the person intends to return home
  • the care home resident's partner (who is not estranged or divorced from them ) still occupies the property
  • a relative of the care home resident occupies the property and is aged over 60 or incapacitated
  • a child under the age of 16 years, who the resident is liable to maintain, occupies the property
  • a lone parent, who is the resident's estranged or divorced partner, occupies the property

Also

  • if the individual's other capital is below the higher means test threshold (currently £23,250), and their income is insufficient to meet care home fees, then the value of the property would be disregarded for twelve weeks from the date of permanently entering the care home
  • individuals who have not been able to or do not wish to sell their homes to pay for their care can enter into a deferred payments arrangement with the local authority. Under this arrangement the local authority will provide funding which is treated as an interest free loan secured against the value of the property

Obviously there are perfectly good reasons for transferring a property to a trust. You may want to unburden yourself of the responsibility for the property but protect your right to live there and protect your life interest from family members' creditors or their spouses. You may be concerned about losing your capacity to manage the property and affairs at some future date and make decisions now to get your affairs in order. However, there are legal costs in transferring a property to a trust which could run into four figures and If the trust is created just to avoid care fees this could be money wasted, if the local authority puts in a  successful challenge.

Further reading: Residential care costs, Paying for permanent residential care

I hope that helps

Damien

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