Q: We are a retired couple in our 70s who own our house. We are worried about paying care fees should one of us have to move into a care home. Is it possible to give half the house to our children? We heard there is a 7 year rule in place so that after that time it can’t be challenged by the Local Authority. Please could you explain?
A: The 7 year rule is actually a myth. Any attempt to give away your assets with a view to avoiding care costs can be challenged by the Local Authority as a deliberate deprivation of assets, regardless of how long ago it was.
The idea of giving half your house to your children probably relates to care cost planning in your Wills, the idea being that you ensure your property is owned as tenants in common. This means you own half the property each and can then make Wills ensuring that when the first of you passes away, your half will be placed into a trust that allows the survivor to carry on living in the property for the rest of their life, after which time it will pass to your children.
Should the survivor require care in the future, they will then only own half of the property, which could be used to fund the care fees. A person with assets in excess of £24,000 requiring care in Wales is responsible for funding their care costs therefore this method can help to protect half the value of the house from being considered in the financial assessment. The care fee regime in England is however slightly different, whereby if you have assets over £23,250 you will be responsible for funding your full care costs, whilst if you have between £14,250 and £23,250 you will be required to make a contribution to the fees.
(Article published 09/01/2017)