Gransnet forums

Legal & money

Deprivation of assets

(70 Posts)
pensionpat Mon 14-Sep-20 08:37:58

I have a background in benefits for older people and my understanding, with that of my colleagues, was that there is no legal way to “protect “ property from being required to be sold to pay for care.

Next week we are updating our wills. A close friend who did this last year said that their solicitor had sold them a product, a kind of trust, which meant that whatever happens in the future, they are guaranteed to be able to leave their property to their family. I did not share my concerns. They had already done it.

But it does concern me that a) this company is giving wrong info. and making money out of clients and b) my understanding is wrong and we should at least consider it.

Have the rules changed? Any experiences among GNetters.

Cabbie21 Tue 15-Sep-20 19:28:54

I have been in the same position as the OP, where a friend told me about a trust set up supposedly to avoid her house being taken for care costs. As it had been done, I said nothing, but I would certainly speak up if someone was considering it.

As Espee said there is so much misinformation and confusion being spread around, both on this thread and in real life. There is plenty of accurate information online or by contacting relevant charities, Citizens Advice, Age UK, Shelter, for starters.

A further unfair aspect of care costs which I don’t think has been mentioned is that whilst some terminal illnesses are covered by the NHS, dementia is not, and the costs of care can be very high.

M0nica Tue 15-Sep-20 19:39:45

If you own a house that means that you have been fortunate in life and have had the wherewithall to buy one. Children of home owners are more likely than children from rented homes to get a good education and have good careers.

If you go to great lengths, legal or otherwise to stop your house, or other assets being used to pay for your care, you hve to look to the state to pay for your care. State money comes from taxes paid by everyone except the very poorest - and even they pay VAT on the goods they buy.

You are saying that in order to give your all ready, probably comfortable off children a nice lump sum you are prepared to offload the payment of your care onto those less well off than you, those unable to afford house ownership and the poorest people.

This strikes me as immoral and unethical.

mokryna Tue 15-Sep-20 19:43:40

If you do not have enough money to pay for care in France, the government assesses your family‘s income and judge how much they should pay towards your keep.

suziewoozie Tue 15-Sep-20 19:59:33

Yes mok my French friend’s
savings were utterly depleted paying for her mother’s care which has left her facing quite a restricted retirement.

sparklingsilver28 Tue 15-Sep-20 20:30:08

My problem is I cannot do what I want with my asset, my home. I am not wealthy and only asset my home which has a mortgage 1/5 of its value. What I want is to leave my only C a life interest in the property which allows her to live in it or to rent it out, and any financial gain for her benefit and cover property maintenance. After her death the value of the asset to be equally divided between my GC. The reason for this choice is should my only child die before her spouse my property asset will not form part of her estate. I am constantly being advised by my solicitor to allow the sale of the property on my demise and its value divided between my D and GC. This isn’t what I want and other than finding another solicitor willing to help me achieve this, any advice please?

M0nica Tue 15-Sep-20 20:40:07

I am sure you can put the house in a trust in the same way that when you divide assets between husband and wife, that will often go into a trust so that, assuming husband dies first, the wife has a life time interest in the husbands assets throught the trust, but when she dies it all goes to the children, or whoever.

I would get yourself a new solicitor and tell the new one that you want the house put in a trust. The only possible downside is that there may be some taxation implications. There aren't between husband and wife, but for other groupings there may be.

Floradora9 Tue 15-Sep-20 21:49:31

LadyStardust if you gift your property to your children and continue to live in it they have to charge you rent this is important as what they charge you , whether money actually changes hands or not , would then be liable for tax as thier income .

Doodledog Tue 15-Sep-20 22:23:47

M0nica, it is not always the case that those who own houses have been fortunate in life. In London and the SE, perhaps, but in large areas of the north people make very little by way of profit on housing, and any taxes raised on property would work in their favour, rather than against them if the money raised were to be spread around the country.

It can be very difficult for someone with a house in a low-cost area to be geographically mobile, and the idea of having a 'bank of mum and dad' or any means of helping out adult children is a pipe dream when any profit made is barely enough to cover the costs of a move.

As for it being morally wrong to want to avoid care costs, I remember distinctly how my grandmother felt when she went into care. My grandparents were not wealthy. They married in the 1930s, and my grandfather became unemployed in the depression. Before anyone could claim 'national assistance' they needed to prove that they had nothing that could be sold. People would come to the house and look around for anything of value, and insist that it went before allowing any claim.

My grandad was an organ builder by profession, and lost his treasured piano in this way (one of the reasons I am so anti means-testing). He never really recovered from this, and when I was a child, decades later, I never remember them buying anything of value - they felt they didn't deserve to have anything nice, or that it could always be taken away from them.

Years later, they had managed to buy a flat on a mortgage. They lived frugally in order to pay for it, and rarely did anything 'fun'. A neighbour of theirs, Betty, used to like to go to bingo, and have an occasional holiday in a holiday camp. She rented her house, and I clearly remember my grandmother saying that she (Betty) would regret her extravagance when she was old, as she had nothing to fall back on, and who would pay for her care?

What happened was that years down the line all of them ended up in care, and were in the same council-run sheltered housing. Betty had a flat on the same floor as my grandparents. The difference was that they had had to sell their home and use the money to pay the rent until it was all gone and they were penniless, whereas Betty got her rent paid from day one.

It was heartbreaking.

Nobody with an ounce of compassion would want to see the likes of Betty suffer (and she hadn't exactly squandered her money anyway!), but knowing what my grandparents did without in order to improve their old age has made me feel very strongly that means tests, and so-called 'affordability tests' are deeply unfair and unjust.

I am very much in favour of a fair deal for everyone, but that should include those who choose to save their own money for old age (or save for plastic surgery, or a world cruise, or whatever they like) without a moralising state saying that they can't have their dreams because they can 'afford' to pay for what people who have made different choices get for nothing.

Davidhs Wed 16-Sep-20 07:28:07

“If you own a house that means that you have been fortunate in life“

For most it is because they have worked hard, been thrifty and instilled those values in their children. Home owning is not a rich persons privilege these days even a couple on modest wages can get on the property ladder. No Capital gains on private houses is a deliberate incentive to encourage home ownership, if you didn’t have that you would be taxed every time you moved house.

Davidhs Wed 16-Sep-20 07:44:08

Sparkling is grumbling about her solicitor advising against her wishes. As a principle you should not try to control events from beyond the grave, let the next generations decide how they want to use the assets or cash.

There are 101 reasons why leaving your family a free hand can be better than tying the house up in a trust for decades.

Maggiemaybe Wed 16-Sep-20 08:33:26

I agree with Esspee regarding the dangers of listening to advice from people who aren’t qualified to give it, and with M0nica that we would see it as morally wrong to try to benefit our own children by expecting other people’s to pick up the tab for any care we might need. Fortunately our children agree with us on that. I suppose if they weren’t capable of making their own way in the world for whatever reason we might think differently.

There’s an interesting and comprehensible article by Paul Lewis in the Radio Times this week about the issue raised in the OP. Apparently only 1 in 5 of us will die in care and fewer than 1 in 20 of our estates will be subject to inheritance tax, so the odds are good. smile

money.radiotimes.com/retirement/hold-onto-your-house/

Illte Wed 16-Sep-20 08:41:35

I wonder, sparklingsilver if your solicitor has talked you through some of the possible ramifications of what you want to do.

Renting a house nowadays is quite arduous with all the new legislation and a bad tenant can cause all manner of stress and hassle. It may not be something you daughter would want to do.
Nor might she want to live in your house.

She would, however, even if she left it empty be responsible for all the expenses, council tax, maintenance, repairs. You could leave her in a very difficult financial position.

If she needed to go into care it is possible that the potential rent of the house would be regarded as an asset.

It could also cause family problems if the grandchildren felt that their future asset was deteriorating in value. If she did live there she could not make alterations without their consent.

I could go on. You can see why your solicitor is wary of following your wishes.

But it is possible to do as you wish.

Doodledog Wed 16-Sep-20 10:41:00

Maggiemaybe, what would you have said to my grandmother in the situation I described above?

Maggiemaybe Wed 16-Sep-20 11:32:52

The same as to anyone else in that position, and what we said to my MIL, Doodledog. She had a frugal life, and all her savings plus the proceeds of her small house, apart from, I think, £12500 (?), went on her care. On the one occasion she expressed concern that it had “all gone”, we told her not to give it a second thought. We were happy that her money had gone on decent care for her, and we hadn’t expected, or earned, the proceeds of her and her husband’s hard work. We had a lovely family holiday with our share of the small inheritance, and told our children always to think of grandma and grandad when they remembered it.

The person in care isn’t the one losing out.

Doodledog Wed 16-Sep-20 11:59:06

Yes she was missing out. I was a young child, so have no vested interest, and my parents didn't stand to inherit anything - my grandad lived until he was 99 - nobody was ever going to get a penny, and nor did they expect or want to.

Anyway, my grandmother lost out because she was in sheltered housing, but not full-on care (at first). She had a front door key and could come and go as she pleased, but couldn't afford to go anywhere, as her pension was used to pay the rent after the proceeds of her flat had been used to pay.

Fair enough - she had a roof over her head, and three meals a day. But the difference between her situation and that of her neighbour who was given the rooms on the same floor was that the neighbour had spent her money on holidays and bingo, whereas my grandparents had saved in the hope of a more comfortable retirement.

Betty, the neighbour, got the rooms for free, whereas my grandparents had to pay for theirs until there was nothing left, at which point their pensions were taken. Both they and Betty were given pocket money out of their pensions for things like shampoo, but there was nothing to show for the years of saving.

My point of view is not about inheritance per se. It is about the right to spend one's money on what one wishes, whether that is on bingo, opera, owing a piano, fast cars or leaving it in a will. We could pay for social care out of taxation, so that it is free at the point of need, and let people keep their earned and taxed income to spend how they wish. I think that that would be immeasurably fairer.

Maggiemaybe Wed 16-Sep-20 12:10:34

Of course we could pay for social care out of taxation, and I agree wholeheartedly that we should. But unfortunately we are stuck with the system we have.

Doodledog Wed 16-Sep-20 12:19:17

Maggiemaybe

Of course we could pay for social care out of taxation, and I agree wholeheartedly that we should. But unfortunately we are stuck with the system we have.

Why are we stuck? Things don't have to be as they are just because they are as they are.

We could change things, but if we don't, I can't see how there is a moral argument against people using the existing legislation to ensure that they don't fall foul of the flawed system we have. As I said earlier, I chose not to use the 'skip a generation' will, but I don't think that those who do choose it are in any way immoral.

Illte Wed 16-Sep-20 12:26:29

But is it right that someone on a low to moderate income, who perhaps has no hope of owning a house, should pay increased tax so that somebody else can inherit a property worth a million?

Doodledog Wed 16-Sep-20 12:34:39

How would that happen? Income tax is staggered, so low earners pay far less than high ones.

It is, of course, important to ensure that everyone pays their share, but it is perfectly possible to do that, if there is the political will.

Doodledog Wed 16-Sep-20 12:36:30

Also - as things stand, the rich (as opposed to home owners who come in all shapes, sizes and income levels) can afford to pay for social care and have enough left to hand down, so inequality is perpetuated even more. The poor have nothing to pass on, the rich do, and those in the middle have theirs taken away.

suziewoozie Wed 16-Sep-20 12:41:22

Tax is not just about income tax - we have a large and ever increasing swathe of tax raised indirectly and indirect taxes are by their very nature regressive. Additionally, poorer people generally suffer more from decreased public spending

Illte Wed 16-Sep-20 12:49:05

Everybody would have to pay more doodledog, incrementally yes, but still more than they pay now.

If all care were free, the rich would be even richer because they wouldn't have to pay anything. At the moment they'll ever get it free, so I don't follow your reasoning.

Illte Wed 16-Sep-20 12:49:22

never

Doodledog Wed 16-Sep-20 13:03:25

suziewoozie

Tax is not just about income tax - we have a large and ever increasing swathe of tax raised indirectly and indirect taxes are by their very nature regressive. Additionally, poorer people generally suffer more from decreased public spending

Agreed, but that has nothing to do with means testing.

Illte, my reasoning is that if we were taxed fairly, we could afford to look after those who needed social care. The rich would pay more (how much more would be up for debate, but if it were up to me there would be a fairly radical shake-up), so there would be a lot more in the system than currently.

After we have been taxed, what we do with the money left over should be up to us. It is not (IMO) the business of other people to dictate what we can or can't afford (what does that mean anyway?) and for others to decide how we should spend our money 'morally'.

Whether we should tax profit on property or change any other existing financial rules is, again, open to discussion, but at this stage none of that is relevant to this thread, which has become about whether or not it is 'moral' to take the property that someone has already paid for after tax to pay for their care, whilst others are allowed to spend their after-tax income how they like and get it free.

I fully appreciate that many people are not in a position to save, (and they should, IMO, be paid more, which again, is for another thread) but they would, in the scenario I describe, pay little or no tax, and would get free care if they need it.

It's not a race to the bottom, though - are those who advocate taking assets to pay for care suggesting that we should aim for a system where nobody should be better off than the person with least? Why not aim to have more people with more?

suziewoozie Wed 16-Sep-20 13:09:56

The value of a property has not in the majority of cases been paid for after tax. There was tax relief on the mortgage interest for starters and then the increase in value is not taxed at all - and tbats were most of the value is