What's this scheme called please

I would call it a legal loophole rather than fraud

Libman, you must realise that attempting to avoid paying care fees is a very contentious issue. If someone had told Kate her husband was talking about a trust, without saying more, it would have implied that it’s a method which works and is perfectly acceptable. It doesn’t work and it’s not acceptable - it’s attempted fraud.

To answer your questions, Cabbie:
If the person needing care has accumulated antiques and collectibles, they are assets to be valued and taken into account when their care fees are assessed.
If the value of all assets is below the threshold, yes the LA covers fees.
The other spouse doesn’t have to contribute to the costs of the person in care out of their assets or income.

As I said, I never met anyone who deliberately spent all their money to live on the state.
I wasn't suggesting that people deliberately spend in order to live on the state; more that living on the state is what happens when people have spent all their money.

As an example, I know someone (let's call her A) who earns in the region of £80k a year (this was pre-Covid, and is maybe a lot more now given the nature of her job), yet has no savings, rents her house and has run up significant debt on credit cards and bank loans. She has expensive holidays, she and her partner both have high end cars, they eat out most nights and spend freely.

I see nothing wrong with that - she has earned the money and it is up to her how she spends it. She has a blasé attitude to the future (her favourite phrase is 'you can't sue a corpse') and she is happy for her sons to make their own way in life, as she did. Again, that is a reasonable attitude, and it is her choice. A is in her early 60s, and will be working at least until she is 66, because of no savings and a rented house etc. She has a tiny pension coming, as she was automatically enrolled when the workplace pension came into force - but previously her attitude was that she'd worry about that when the time came, and 'they' wouldn't let her starve.

Fast forward and the chances are that she will be in a similar financial situation, not because she has had no opportunity to save, but because she has chosen not to, (as is her right) yet if she needs care she will get it free, which is as it should be, given that there is no alternative.

A is a real person, but her (mythical) twin sister, B, who worked in the same job on the same salary, but lived more frugally, paid into the pension scheme and bought a house that she hoped would provide a nest-egg for her daughters, would have to pay for the same care, sell her house and leave them with nothing*. In the interim, A will, presumably, get pension credit and help with rent, council tax, dentistry etc, and B (if she existed) would not, as she paid into an occupational pension.

I wouldn't blame B for feeling resentful, even though A hasn't deliberately disposed of her assets, as if both needed care there is a good chance that B would be left with nothing, in the same way as if she had spent money along with her sister.

*I understand that a lot of people don't think that leaving the children anything is important, but my point is that A and B should both be able to make the decision whether to leave something behind, yet only A's choices are respected by the system. B has no right to choose what to do with her own money, and whether I personally approve more of one lifestyle or the other is not important (I am not judging) - a compulsory system should be fair.

And yes, Libman - on a discussion site it is not unreasonable for people to discuss a situation.

Here is a situation I cannot get my head round.
If someone needs care, only their half of joint savings is taken into account, or the whole of their personal savings if they keep them separate.
So what if one spouse spends lots of their money on expensive antiques, or collectibles, or clothes, for example. Are they taken into account?
If not, and their assets are below the threshold, the LA covers their care costs., yes?
If the other spouse is a saver, not a spender, are they expected to contribute to their partner’s care? If they do, there might be nothing left for their own care, if needed. Money they have saved, not spent. Is that right?

Floradora9

We were almost talked into doing something like this but thought better of it . It was going to cost a couple of thousand to set up and the more we read about it the less likely it would be legal in trying to avoid your house being sold for care needs. My DH also is of the belief that we should pay for our own care. If one of you is still living in the house it cannot be sold for care needs , in Scotland anyway . One thing you have to avoid if you are left alone in the house is dowsizing as then half of the excess money can be used .

The problem is, though, that the OH might not be able to stay comfortably in the family home, particularly with heating bills going up so drastically.
If care home fees are paid out of income and savings which then rapidly become depleted it could become difficult.

If posters can’t speak their mind GN is going become so anodyne as to be tedious.
Were people supposed to just say this scheme is called X
And Leave it at that ?
So it’s not a discussion forum ?

PS I reckon Volver has been pretty restrained??

We were almost talked into doing something like this but thought better of it . It was going to cost a couple of thousand to set up and the more we read about it the less likely it would be legal in trying to avoid your house being sold for care needs. My DH also is of the belief that we should pay for our own care. If one of you is still living in the house it cannot be sold for care needs , in Scotland anyway . One thing you have to avoid if you are left alone in the house is dowsizing as then half of the excess money can be used .

No Libman you did not mention me by name. However Libman you have mentioned me now. Thank you for telling me what you think of me Libman. It won't make much difference to me Libman, it won't affect how aggressive I am, or at least how aggressive you think I am Libman.

I think we had an interesting thread recently that covered, among other things, how threads meander. A great example here, I think.

volver

Libman

Kate1949

Not to me it wasn't. I'm a simple soul. Or a bit thick!

With you there Kate. Too many keyboard warriors spitting feathers about what they consider is right - as usual. You only asked for advice - not opinions.?‍♀️

1) I don't think you know what keyboard warrior means.
2) I don't spit feathers because I am rational and can form a cogent argument
3) What I consider to be right happens to be the law of the land. Heigh ho.
4) If you don't want opinions, don't come on a discussion site ??

I apologised at least twice to Kate1949 and she got lots of good advice.

Thank you for clarifying the correct meaning of keyboard warrior Volver. You are correct.

Did I mention you by name Volver?

Kate didn’t ask for opinions, she asked:
There is a 'scheme' whereby you can put something in place which means you don't lose your home if you have to go into care. We can't remember what it's called. Does anyone know?

You and others decided to offer your opinion. Kate did indeed get some good advice but she clearly felt under attack from some of the responses.

Sometimes I wish you would offer your rational and cogent argument in a a less aggressive manner. That’s my opinion and it is directed at you Volver.

It’s not always illegal to do what some of the posters have done to protect their finances. It may be sometimes if by doing so was it was deemed to be a deliberate deprivation of assets. It may also be morally questionable but why not give the facts and let others decide for themselves?

Yes Calli.
Another can of worms.

Urmstongran

On this topic I wholeheartedly agree with volver and GSM. ?

From the cradle to the grave, Urmstongran

Unless you get, for example, dementia.

Doodledog only just seen your inquiry about paying rent on a property. It only applies where you own and live in a property, like a family home, give it to someone to get it out of our estate and continue to live in it as you did before. It goes no further than that. Your age when you do this is irrelevant. If a 40 year old person chose to give their house to one or all of their children, but still live in it as the family home, they would have to pay the market rent to their children.

It is a case of not having your cake and eating it Not giving your home away and living in it for free.

As for dowager duchesses, most big estates are held by completely separate companies from the owner of the family title with boards of directors of which the person with the title may not be one. Most are run very commercially and the dowager duchess and her son the duke, probably pay rent for any accommodation they live in, whether the Dowager Duchess in the Dower House or the current Duke in a flat in the west wing.

Barmeyoldbat

German………mum yes it was all explained to us just as you wrote. We have been tenants in common for some years now as before marriage we were living together and I had given up my house and put the small amount of money I made into his new home. It gave me some protection. We put the trust in place when we made new wills, he has no children. We understand about the trust etc, also if Mr B goes first and I am left I will then be sharing the ownership of the house with my son. I understand it all and at the moment I am happy with it, it is not fraudulent as other posters have indicate and we took advice from three different solicitors.

I think what you have arranged is what a lot of couples do if tenants in common. If the house is the main asset then it’s a way to pass half to a child upon the first death and then the remaining part upon the death of the surviving partner.

However, it’s something I cannot do as I live alone so on my death my house goes to whoever I state in my will, hence inheritance tax being incurred - I only get one IT benefit rather than two which widows get.

Does anyone know if capital gains tax is charged on the increased value of a child’s share of the house from when it is inherited to when it is sold? Had my parents been tenants in common and my dads half bequeathed to me, then capital gains tax would be a lot as he died 38 years before my mum did. I know that because we rented out mums house when she went onto a care home, we will be subject to capital gains tax from probate to when we sell the house once the current tenant leaves.

Libman

Kate1949

Not to me it wasn't. I'm a simple soul. Or a bit thick!

With you there Kate. Too many keyboard warriors spitting feathers about what they consider is right - as usual. You only asked for advice - not opinions.?‍♀️

1) I don't think you know what keyboard warrior means.
2) I don't spit feathers because I am rational and can form a cogent argument
3) What I consider to be right happens to be the law of the land. Heigh ho.
4) If you don't want opinions, don't come on a discussion site ??

I apologised at least twice to Kate1949 and she got lots of good advice.

We keep getting all these stories about mythical people who spend huge sums of money on wild living and then expect the state to support them in old age. Yet try and get some examples and it is very difficult.

I worked for Age Concern (as was) as a Home Adviser for 10 years and in all that time I met very few households that came anywhere near this definition and in each case it had nothing to do with conscious spending all their assets so they could live off the state, but rather the common or garden fecklessness that is found at every level of society.

Even then, there was usually a house in the background. One man did not discover until shortly before his death that his substantial occupational pension, included no widows pension and once he died, the pension stopped, leaving his wife on state pension and pension credit, another man had never got round to sorting a pension out, so once they had devoid themselves of limited savings they were left again on state pension and pension credit, both did have big houses.

There were one couple we helped when their children rang us in a panic seeking help because their very elderly parents were about to be evicted for not paying their rent and the children had discovered they had huge credit card debts. They did not have an obviously extravagent lifestyle, but money seemed to slip through their fingers to no particular effect.

As I said, I never met anyone who deliberately spent all their money to live on the state.

I’m not sure quite what you’re describing Barmey but it seems to be a trust in favour of your son which only comes into existence on the death of you or your husband. In that case, in the meantime the value of your individual shares in the house will be taken into account in calculating care home fees. So I don’t really understand what you think you’ve achieved.

kittylester

Just to add that Tenants in Common can will their share of the house to whomsoever they wish. It doesn't have to be the other tenant.

I knew you were right, Kitty as we did that some years ago.

Kate1949

Not to me it wasn't. I'm a simple soul. Or a bit thick!

With you there Kate. Too many keyboard warriors spitting feathers about what they consider is right - as usual. You only asked for advice - not opinions.?‍♀️

On this topic I wholeheartedly agree with volver and GSM. ?

Good point Tizliz

Just to put another point of view. If you only have £20 left then you have probably been supporting the economy by buying goods, keeping people in work and paying vat far more than the person who has saved all their money.

German………mum yes it was all explained to us just as you wrote. We have been tenants in common for some years now as before marriage we were living together and I had given up my house and put the small amount of money I made into his new home. It gave me some protection. We put the trust in place when we made new wills, he has no children. We understand about the trust etc, also if Mr B goes first and I am left I will then be sharing the ownership of the house with my son. I understand it all and at the moment I am happy with it, it is not fraudulent as other posters have indicate and we took advice from three different solicitors.

So so sad than in 2022 our old and very vulnerable are treated in this disgusting and insensitive way.

Awful experience.

I’m going on a bit now. But I’m also worried that people don’t seem to realise that if they are funded by the LA they won’t have any choice about care homes. Not only will they be put in the cheapest but the cheapest could be miles and miles away from their home and relatives. They could have a very miserable last few years and the stress on their relatives having to drive miles and miles to see them could be enormous.

A dear friend of mine spent her last year in a horrible place, old and gloomy, on a busy noisy road, sometimes not even got out of bed, cheap meals with little choice and horror of horrors communal laundry so she was dressed in underwear and nightclothes that others used too.

I did my best to alleviate some of that but the 80 mile round journey meant it was hard to visit as often as I would have liked.
All so that she could pass some on.