Avoiding (some of) the care home costs!
- Thread starter oilovlam
- Start date
TigerLady, my eyes glaze over when people start talking about trusts.
There is a 'Letter of Wishes' to the Trustees, a separate document to the Will. In the letter my father instructs the trustees to allow his wife (mum) to have full and unrestricted use of the nil-rate sum during her lifetime....as the trustees consider fit. On mum's death the nil-rate sum should be distributed amongst the beneficiaries in the Will.
The Will itself is too full of legalise for me to understand.
"There is a 'Letter of Wishes' to the Trustees"
The trustees will normally follow these wishes.
It's like anybody with an occupational pension scheme with a death benefit signing a form stating their wish that the benefit should go to their spouse if they died. The pension scheme trustees will comply although they don't have to. There are unwanted consequences if it had to be paid to the spouse.
The trustees will normally follow these wishes.
It's like anybody with an occupational pension scheme with a death benefit signing a form stating their wish that the benefit should go to their spouse if they died. The pension scheme trustees will comply although they don't have to. There are unwanted consequences if it had to be paid to the spouse.
There was a letter of wishes with my FILs will, the trustees, which include my husband, have no intention of following it! There is no legal requirement. If MIL survived without recourse to it (highly likely) he gave %s for each child, which bore no rhyme or reason to reality. (OH says the only good thing about FIL is that he is dead and buried and MIL despite being married for 47 years has never missed him, think her only regret is not considering divorce)
The trustees intend (I think) to split it equally between the 3 children as no arguments that way.
A good solicitor should be able to provide a sensible plain English summary of the will, my FILs will was full of convoluted terms, in my opinion, this is only to make the work sound far more complex than it is.
Ultimately a high St solicitor is no more specialist in any area than a GP is a specialist in a given area of medicine.
Maybe just my Accountants view of solicitors
The trustees intend (I think) to split it equally between the 3 children as no arguments that way.
A good solicitor should be able to provide a sensible plain English summary of the will, my FILs will was full of convoluted terms, in my opinion, this is only to make the work sound far more complex than it is.
Ultimately a high St solicitor is no more specialist in any area than a GP is a specialist in a given area of medicine.
Maybe just my Accountants view of solicitors
I was doing some rough guesstimates on the benefits of having a trust....until I read Nitrams feedback and that took the smile off my face. Here are my calculations....which do not take account of the above statement by Nitram.
Values are not accurate, I was just trying to work something out in my head (incorrectly so it seems)
Value of house=£400,000
Cash (mum's)=£60,000
Care home cost/year=£60,000 (probably under-estimated....I live in hope)
Mum's total assets =£260,000
Assets in Trust =£200,000
Number of years Mum's assets would fund private care for=(260,000-23,000)/60,000=237,000/60,000=4 years (approx)
Then the LA would start funding (with a top up provided by the trust).
Assuming LA funding=£600/week
The amount the £200,000 trust would fund each year=60,000-(52*600)=60,000-31,200=£28,800
Number of years the £200,000 trust would provide 'top-up' care for=200,000/28,800=7 years (approx)
With the trust there would be enough assets for 11 years (4+7)
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Number of years the assets would last with no trust=(460,000-23,000)/60,000=437,000/60,000=7.3 years
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SO my first calculation suggested that the trust would make the assets last an extra 4 years....which looked good until I read Nitram's statement. Now I'm not so sure.....back to the drawing board.
Maybe just my Accountants view of solicitors
I expect solicitors have a similar view about accountants
Sorrow if I upset your thinking.
Several people do not realise that when the LA fund a single person at £x this amount includes all the person's income less £24.90 personal expenses allowance (PEA) which they are allowed to keep.
The last £14250 are left for the person, between £23250 and £14250 the LA pay a tapered amount.
You need to get a spread sheet going.
Going back to the title of this thread the only way fees can be reduced is if the share of the house is not taken into consideration in any LA financial assessment. This may not be possible.
The trustees can make their decision now or at any time in the future.
Several people do not realise that when the LA fund a single person at £x this amount includes all the person's income less £24.90 personal expenses allowance (PEA) which they are allowed to keep.
The last £14250 are left for the person, between £23250 and £14250 the LA pay a tapered amount.
You need to get a spread sheet going.
Going back to the title of this thread the only way fees can be reduced is if the share of the house is not taken into consideration in any LA financial assessment. This may not be possible.
The trustees can make their decision now or at any time in the future.
Does your mother have pension or other income? As Nitram has pointed out, you should take that into account when working out how long her money will last.
My thoughts are definitely not expert but....if I was the LA being asked for funding and it was possible to use the funds in the trust to pay top-up fees, I would not see any reason why the trust funds couldn't pay the whole fees? I've probably missed something though....
It depends on who actually legally owns those funds. The trust could of course choose to pay the entire fee, but they may not be required to.
Mum has a small(ish) private pension, the state pension and the attendance allowance (assuming that continues if she goes into care).
It looks to me that LA/government deliberately under fund social care. By the time mum's income is taken into account the amount paid by the LA towards the care might be relatively small.....the top-up is for those lucky to have private means or generous families. The system seems somewhat imbalanced.
I have to try to work out whether it is worth setting up the trust fund (hassle, expense, arguments with LA over 'deprivation of assets') or just go for the simple option.
The solicitor has put the option on the table to put dad's half of the house in trust such that "....the capital value of assets in trust (half share of house) are excluded from the assessment of means.....for means tested support from social services".
I guess the solicitor is fairly certain that the LA would not have any claim on the trust.
In dad's 'letter of wishes' it did say that mum should have 'full and unrestricted use' of the sum in trust during her lifetime as the trustees consider fit. I suppose in legalise this means that mum has no right to the trust funds because access is at the discretion of the trustee(s)....so the assets (half the house) aren't under mum's control directly and are therefore exempt from a list of her assets. Guessing slightly here.
Good question...I have no idea. There are executors of the will, then trustees of the trust (not sure if that exists yet....it may be already created by the Will itself). I have POA for mum and I think I will need another person to be the Trustee of the 'new' trust. So in that respect it's as clear as mud to me.
One of the many questions I have to ask the solicitor. At some point the solicitor is going to start charging and the costs start to mount....at the moment I'm on free time....but I suspect that will change soon.
May need to talk to citizens advice to get free advice so that I can make my decision.
In terms of my family...they don't seem to be interested (not that I talk to them much)....short of squandering mum's assets on gambling and wild women, I don't think they want to know. They sort of trust me.
If the LA could prove that
"....the capital value of assets in trust (half share of house) are excluded from the assessment of means.....for means tested support from social services".
was a reason for setting up the trust it's likely they would do all in their power to include the half share. They would claim that there had been 'deliberate deprivation of assets' and add the value of the half share to your Mum's assets as notional capital.
"....the capital value of assets in trust (half share of house) are excluded from the assessment of means.....for means tested support from social services".
was a reason for setting up the trust it's likely they would do all in their power to include the half share. They would claim that there had been 'deliberate deprivation of assets' and add the value of the half share to your Mum's assets as notional capital.
I can't see why having LPA for your mother should bar you from being a Trustee as long as there are others as well. As holder of the LPA you are beholden to consider the best interests of your mother , therefore surely your opinion should be important when decisions are made regarding her need, should it arise, of financial help from the trust.
It is as well to remember too, that LA finances are weak and unlikely to improve in the short term so things are not going to become any easier regarding their funding of care.
It is as well to remember too, that LA finances are weak and unlikely to improve in the short term so things are not going to become any easier regarding their funding of care.
If you are the only trustee, then I can't see a problem as presumably you will follow your dad's instructions and release extra funds from the trust if you feel that is in your mum's best interests.
But this is where, I suggest, knowing if there are other trustees involved is so important, because who is to say that they won't try and protect their inheritance instead by refusing to pay any top up fees or whatever? Could that be what the solicitor means by 'talking to the family'? In other words, can you trust the other trustees to do the right thing by your mum?
Don't underestimate the power a potential inheritance has to influence people's thinking. We see it time and time again here on TP.
Agreed. You never really knows what goes on in people's minds. As you suggest, people can see it as their inheritance...or their children's and can find a suitable excuse NOT to do the right thing. Finding a 'suitable' trustee could be one of the major factors in whether I set up the trust.
