Avoiding (some of) the care home costs!

oilovlam

Registered User
Aug 2, 2015
386
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South East
Dad passed away last year. The house is held tenants-in-common. The solicitor has suggested putting dad's half of the house into a trust, this would mean dad's half of the house would be exempt from the means assessment for mum by social services, should she go into a care home.

Firstly, I would prefer for mum to have all of the assets. It would be simpler and as some have pointed out on other threads it is her house.
Secondly, I don't know whether a trust is expensive to maintain....I hate paying solicitor fees.
Thirdly, dad's Will did go into setting up a trust (it was created in the period when trusts were all the rage) but mum was to have access to the funds in the trust (I forget the wording)....at the discretion of the trustees. So I guess he didn't want her to go short. So going by the spirit of the will it would be OK to transfer everything over to mum BUT if I was to 'play' the system and protect some of the estate for us children would that be so awfully wrong.

I have been advised to consult the family....but when money is concerned things can turn nasty. I'm a little confused....but thinking to NOT go for the trust and NOT tell the family in general (what they don't know doesn't hurt them).

Note: The only asset in the trust would be the half share in the property...no cash or shares. Which would apparently make the trust simpler to maintain.

Any feedback accepted...no matter what your views.
 

jaymor

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Jul 14, 2006
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South Staffordshire
From a person in your Mum' position of being recently widowed I want the whole house to be available should I need care or in fact for the simple reason that it is my home and should be my choice as to how it is managed.

Expectations of funding from the LA are low and there is no likelihood now or in the near future of improvement only possible reduction in funds available.

Care is expensive, we can't change this but we can make sure that those of our family get the best they can afford.
 

oilovlam

Registered User
Aug 2, 2015
386
0
South East
From a person in your Mum' position of being recently widowed I want the whole house to be available should I need care or in fact for the simple reason that it is my home and should be my choice as to how it is managed.

Expectations of funding from the LA are low and there is no likelihood now or in the near future of improvement only possible reduction in funds available.

Care is expensive, we can't change this but we can make sure that those of our family get the best they can afford.

Jaymor, I agree....but the solicitor has put an alternative 'on the table'. I guess they aren't allowed to be overly moral....they only have to do what is within the law. They have come up with an alternative and I have to consider it. I know there are lots of families who are using trusts (for various reasons) to protect the assets of the family (usually from inheritance tax).

I am at the point when a decision I make now could have significant impact on my future and that of my mother. In a couple years time I don't want to regret the decision I make now.
 

Chemmy

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Nov 7, 2011
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Yorkshire
My former next door neighbours were talked into putting the family home into a trust (to avoid IHT) back in 2002 and have lived to regret it. The family have 'inherited' early so are quite happy, and have been on many lovely holidays and invested in property, whilst my 84 year old neighbour is practically on her knees struggling to look after her 87 year old husband, because she no longer believes she can afford the help she needs.

They're lovely people, all of them, but my neighbour has told me many many times, she regrets setting up the trust.

So yes, I'm sure it's the best thing for you and the wider family, but is there any benefit to your mother, or will it limit her choices if she does need care?
 

Saffie

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Mar 26, 2011
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Near Southampton
When my husband was in a nursing home, our house - our home - was discounted. So, after self-funding for some time, the LA contributed towards his NH fees.
When he died the house became mine entirely. I haven't thought at all about putting my husband's half into a Trust or making my daughter Tenants in common and I don't think it has occurred to them either. I sincerely hope not anyway.

I have, and still do, help my daughters and grandchildren financially whenever I am able and they need it but am already aware of how difficult old age might be. If my home can help me pass through old age in reasonable comfort, care and an element of contentment then I know my daughters will be happy with whatever is left.

Incidentally, my husband's home was lovely and for his needs, it suited him well and the care was good. However, with financial restraints ever increasing, nobody knows what the future of public-aided care will be.
 
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nitram

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Apr 6, 2011
30,081
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Bury
Thoughts on Avoiding (some of) the care home costs!

One outcome.

Half house in trust.

Mother in care.

Argument with LA about value of half a house - CA2014 changed things from CRAG - may need court case to set precedent.

If half house included LA don't fund.

If half house not included LA fund trustees could decide to pay top up.

Actual amount saved may not be much as LA absorb pensions etc into any amount paid.

If trustees are professionals there will be administration charges.

Trying to rent out the house would be complex, half owned by trust, half owned by a person lacking capacity hopefully with somebody with POA.
 

Spamar

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Oct 5, 2013
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Suffolk
I'm not going to say yes or no, but if you do go for a trust, make sure it does what you want it to do. I've been involved in two trusts, they have both been so badly worded that I'm sure the donors didn't intend to happen what really happened!
 

Saffie

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Mar 26, 2011
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Near Southampton
To be honest, what should matter is whatever your father put into his Will.
You say it "went into setting up a trust" so was one prepared or just mentioned?
I am a believer in doing whatever a deceased person wanted.
 

sue38

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Mar 6, 2007
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Wigan, Lancs
To be honest, what should matter is whatever your father put into his Will.
You say it "went into setting up a trust" so was one prepared or just mentioned?
I am a believer in doing whatever a deceased person wanted.

I think the dilemma here is that under the will dad's half share of the house has gone into a discretionary trust, which means dad left it to the discretion of the trustees which of the named beneficiaries received the money and when.

As I understand this situation mum is one of the potential beneficiaries and so the trustees could exercise their discretion by transferring dad's share of the house to her now, or they could leave leave it in the trust and transfer it to mum at a later date, or transfer it to other beneficiaries.

Personally I'd leave my options open, but check whether there would be any ongoing legal or other costs by leaving the half share in the trust.
 

jugglingmum

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Jan 5, 2014
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Chester
This sounds like old style IHT planning, where up to the IHT limit was put in a discretionary trust with the spouse as one of the beneficiaries. With the unused IHT band being passed to the spouse, this is no longer relevant.

My FIL did one of these (although in my opinion the wording is poor and not the full intention), and the family have been lumbered with a trust which due to complex relationships (due to FILs poor parenting) they don't deal with properly.

If you don't put half the house in trust I think you are likely to need a deed of variation to the will, which all the affected parties consent to.

I don't think many people in general are that aware of deprivation of assets, although I know the trust manager at work does mention this from time to time.

I think you need to speak with the solicitor again, ask him how it would all work, who are the trustees, what happens if you don't want the trust to be activated, whose consent you need, and what at current rates would be the normal annual fees on this sort of trust. Also if sometime down the line, the trustees decided to exercise their discretion to transfer the asset back to your mum, how would this work.

If the solicitor is not explaining himself, try a solicitor or accountant with a STEP (Society of Trust and Estate Practitioners) qualification, who should understand all this properly.

You need all this info to make an informed decision and you don't want to inadvertently make an error which would rebound on you.

I think others points about being able to choose where your mum goes by making her self funding is valid, and you can always transfer it back to her, but then you will have incurred a lot of fees.
 

Chemmy

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Nov 7, 2011
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Yorkshire
I'm confused. If the money is already in a discretionary trust, surely all the trustees have to be consulted? And don't they all have to agree?
 

tigerlady

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Nov 29, 2015
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As your father and mother owned the house as tenants in common rather than joint tenants, then your father must have deliberately set up the trust for his half of the house to enable him to have a say in what happens to the money from the proceeds of the sale, should the house be sold. If it had been joint tenants your mother would have automatically become sole owner of the house, and therefore if she had to go into care, the proceeds of the whole house would have to be used to pay for her care.

I am only guessing the following, as I am not a solicitor, but if the conditions of the will said that your mum was to have access to the money at the discretion of the trustees, then I dont see the problem, if she is to the only beneficiary of the trust while she is alive. It is not depriving her of her assets as she only owns half the house. If the time comes when she has to go into a home, then the house would be sold and then her half would pay the fees until the lower threshold was reached and then the LA would take over, but with the other half of the money being in a trust, the trustees would be at liberty to top up with it.

As I said, I am only guessing at this, but it seems to me that your father found a way for your mother to have the benefit of the whole house, with half of it being at least partially protected, although in theory it might also get used up on your mothers care and charges, but it would seem a way of makeing the money go further.

Also, as someone else has said, if your fathers will speciified making a trust, it would need a deed of variation to change it.
 

oilovlam

Registered User
Aug 2, 2015
386
0
South East
I think the dilemma here is that under the will dad's half share of the house has gone into a discretionary trust, which means dad left it to the discretion of the trustees which of the named beneficiaries received the money and when.

As I understand this situation mum is one of the potential beneficiaries and so the trustees could exercise their discretion by transferring dad's share of the house to her now, or they could leave leave it in the trust and transfer it to mum at a later date, or transfer it to other beneficiaries.

Personally I'd leave my options open, but check whether there would be any ongoing legal or other costs by leaving the half share in the trust.

Sue38, exactly. The wording of the trust gives the trustee's power to do 'almost' anything.

I didn't know that a 'Will' was the trust document. I assumed that the trust would have to be set up....so at the moment I think the trust hasn't been created but if the trust is the 'Will' then it has.

So basically as long as the costs involved in maintenance of the trust aren't onerous then it may be good to have dad's share of the house in a trust....as long as the trustee does the decent thing when asked (I don't think it can be me....as POA for my mother).
 
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oilovlam

Registered User
Aug 2, 2015
386
0
South East
This sounds like old style IHT planning, where up to the IHT limit was put in a discretionary trust with the spouse as one of the beneficiaries. With the unused IHT band being passed to the spouse, this is no longer relevant.

My FIL did one of these (although in my opinion the wording is poor and not the full intention), and the family have been lumbered with a trust which due to complex relationships (due to FILs poor parenting) they don't deal with properly.

If you don't put half the house in trust I think you are likely to need a deed of variation to the will, which all the affected parties consent to.

I don't think many people in general are that aware of deprivation of assets, although I know the trust manager at work does mention this from time to time.

I think you need to speak with the solicitor again, ask him how it would all work, who are the trustees, what happens if you don't want the trust to be activated, whose consent you need, and what at current rates would be the normal annual fees on this sort of trust. Also if sometime down the line, the trustees decided to exercise their discretion to transfer the asset back to your mum, how would this work.

If the solicitor is not explaining himself, try a solicitor or accountant with a STEP (Society of Trust and Estate Practitioners) qualification, who should understand all this properly.

You need all this info to make an informed decision and you don't want to inadvertently make an error which would rebound on you.

I think others points about being able to choose where your mum goes by making her self funding is valid, and you can always transfer it back to her, but then you will have incurred a lot of fees.

JugglingMum, you're description seems to fit my situation. The trust is old fashioned and was to void IHT. But 'apparently' it could also be used to 'avoid' care home fees.....or to extend the assets by getting LA funding sooner. I assume that the solicitor has taken account of 'deprivation of assets' law....he seems very careful in that respect and has put it all in writing. So I reckon it is legal.

The solicitor is also a 'Trust & Estate Practitioner' according to his letter head.

This whole thing is turning into a can of worms.
 

oilovlam

Registered User
Aug 2, 2015
386
0
South East
As your father and mother owned the house as tenants in common rather than joint tenants, then your father must have deliberately set up the trust for his half of the house to enable him to have a say in what happens to the money from the proceeds of the sale, should the house be sold. If it had been joint tenants your mother would have automatically become sole owner of the house, and therefore if she had to go into care, the proceeds of the whole house would have to be used to pay for her care.

I am only guessing the following, as I am not a solicitor, but if the conditions of the will said that your mum was to have access to the money at the discretion of the trustees, then I dont see the problem, if she is to the only beneficiary of the trust while she is alive. It is not depriving her of her assets as she only owns half the house. If the time comes when she has to go into a home, then the house would be sold and then her half would pay the fees until the lower threshold was reached and then the LA would take over, but with the other half of the money being in a trust, the trustees would be at liberty to top up with it.

As I said, I am only guessing at this, but it seems to me that your father found a way for your mother to have the benefit of the whole house, with half of it being at least partially protected, although in theory it might also get used up on your mothers care and charges, but it would seem a way of makeing the money go further.

Also, as someone else has said, if your fathers will speciified making a trust, it would need a deed of variation to change it.

TigerLady, I agree entirely with your post. It was my thinking....although Nitram seems to suggest that the benefit of having a trust may not be that great.
 

jugglingmum

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Jan 5, 2014
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Chester
I didn't know that a 'Will' was the trust document. I assumed that the trust would have to be set up....so at the moment I think the trust hasn't been created but if the trust is the 'Will' then it has.

The will is the governing document for the trust and creates the trust, although the house does need to be legally transferred into it. We refer to this sort of trust as a will trust.

Incidentally the property will be listed at the land registry as in one or all of the trustees names, and it doesn't show that it is held in trust.

The trustees (who should be named in the will) exercise their discretion to transfer the property to your mum. Maybe this is what the solicitor has mentioned, the other beneficiaries don't have a say, only the trustees.
 

nitram

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Apr 6, 2011
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Bury
"....although Nitram seems to suggest that the benefit of having a trust may not be that great."

Just throwing some 'what ifs' into the great melting pot.

As has been said if the trust is left as it is all future options are open at the discretion of the trustees.

If you Mum was in a care home and her other assets were below £23250 the trustees may decide to give her your Dad's share of the house making it easy for the LA to enter into a deferred payment agreement.

PWD can have a sudden downturn necessitating residential care if funds are tied up in a trust this could mean more hassle at a stressed time.

Is the trust worth the cost of keeping it bearing in mind the CRAG to CA2014 change, what other benefits?

IHT is probably a non starter, without the involvement of the trust if Dad had left everything to Mum she would have an exemption of £650000 (2X£325000) plus from 06/04/17 an annually increasing Main Residence Nill Rate Band (RNRB) of £200000 (2X£100000) to be set against the house value. For any effects of the trust you need to take legal advice.

As I said just throwing thing into the great melting pot.

I think you need to have an informed discussion with the solicitor and make a list of pros and cons in your particular circumstances always remembering the trustees have the final say.
 

tigerlady

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Nov 29, 2015
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Are there other beneficiaries of the trust or does the trust cease to exist if your mother dies? I am quite interested in the details of this as I am changing the ownership of our house to tenants in common.

My husband is in a care home and is at present receiving NHS CHC but I am aware it could end if he gets less challenging. If I die before my husband, obviously the house will be sold and his half will be invested and used if necessary for his care, should the funding end, but I want my half of the house to go into a trust, with the trustees using the income from it and/or capital for his care if in the future, if the funding stops and his own money runs out and a top up is needed. He would be the sole beneficiary of the trust while he is alive but on his death I would want the trust to end and for the remining money to be divided amongst his son and grandchildren. Is that possible? Maybe nitram could advise

I have other savings (at the moment) in my own name from my inheritance from my mother, and these would be distributed in accordance with my will and not go into the trust. My husband no longer has the capacity to make another will and if he dies first he has left everything to me, with provision for his son and grandchildren if I die first.

I should say that the care of my husband is the most important thing, and if the funding should be withdrawn while I am still alive, and the LA wont fund the full cost of the home he is in, hopefully my savings would be enough to pay any top up until I can manage to downsize and release his half of the money.

Also does one of the trustees have to be a solicitor, or can other trusted people be appointed?
 
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nitram

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Apr 6, 2011
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Bury
I am not in a position to give legal advice.

However
If I die before my husband, obviously the house will be sold and his half will be invested...
If the house is owned as joint tenants the whole of the house will pass to your husband outside of any will.

Regarding trusts have a look at Discretionary Trusts on
https://www.gov.uk/trusts-taxes/types-of-trust
The appointed trustees do not need to be professionals.

Trusts are complex and can result in unforeseen, maybe unintended and irreversible, outcomes.

As has been said competent legal advice, maybe with a member of STEP http://www.step.org/for-the-public, is essential.
 

jan.s

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Sep 20, 2011
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72
I'm with Jaymor here.

We both worked hard for our house, and when my husband passed away it was transferred to me totally.

I now know that I have a healthy amount to fund any care I might need in the future, without having to beg someone to top up for me.
 
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