House Held Under Trust - Disregard

Discussion in 'Legal and financial issues' started by PXland, Jan 22, 2016.

  1. PXland

    PXland Registered User

    Jan 22, 2016
    4
    Hi Does anyone have experience of LA challenging the nil value of 1/2 a house held in trust disregard concept?

    I inherited my fathers 1/2 of the house he shared with my mother when he died. They had a new will and property title/ownership structure etc were all updated by our solicitor years before my mum had issues with dementia.

    The purpose of the will/trust clause was to protect my mums right to live in the house until she died. I am an only child and run my own business so i need to be careful about assets i have in terms of my liability.

    My mums condition has progressively worsened (we reached a real crisis over Christmas) and is now in nursing care and being assessed for assistance as having assets above the £23k level (this is only from the property and we started this in 2013 so CRAG applies not the new Care Act).

    The house is let to tenants and the rent is income for my mother and is assessed as such towards her care.

    The LA are raising issues with the trust purpose and that my mum is not in residence, and are using these as reasons to not disregard.

    They say the house has a value and want me to pay 1/2 for valuation (I believe they should pay this).

    As my mum now needs nursing care the situation with the LA is at a head. I am also considering contacting the Ombudsman as they have been sat on this for 2 years (in spite of my chasing) and i think is maladministration on their part and it is making an already stressful situation worse. A battle for later perhaps!

    My solicitor has confirmed we are correct in that the house should be disregarded but I expect we will have a battle - has anyone been through this and has any advice?

    P.S. Sorry if this is long but everything around this subject is made so complicated by the LA. :confused:

    P.P.S Don't even get me started on top ups - the LA told me it was my responsibility and duty to pay the top up and certainly not my choice... misleading to the point of lying! :eek::mad:
     
  2. Pete R

    Pete R Registered User

    Jul 26, 2014
    2,046
    Staffs
    Hi PXland and welcome,

    You obviously have to be guided by your solicitor however I do have a couple of points.

    Firstly since your Mum has only recently gone into a Nursing Home why is that you think that CRAIG applies and not The New Care Act? Why would this be going on since 2013?

    I would see why it would be beneficial for your case as under CRAG it was widely accepted that the value of half a house was nil whereas TNCA does not mention it and only case law will decide. Maybe it will be you.:) As I read it as it stands then half a house can be valued and included in assets.

    I can understand why the LA are challenging it now your Mum has gone into care and may have fulfilled the obligation of the trust but are they saying that the whole property should be included or just your Mums half?

    The LA are responsible for obtaining a valuation however if you dispute that you will have to pay for your own.

    The Local Government Ombudsman will not want to know till you have exhausted the complaints procedure with the LA.

    Top Ups in this could be quite important. If you want the house disregarded and your Mum's other assets are below £23,250 then the LA are obliged to offer you at least one NH that they will fund (apart from pensions/benefits) that can meet your Mum's needs. If you do not like this home their obligation is complete. If the NH you/your Mum chooses is more expensive then a top up has to be paid by someone.

    If the house is included in your Mum's assets (whether that be half or the full amount) and your Mum becomes self funding then the LA should offer you a Deferred Payment Agreement. They are not obliged to on a disregarded property. Depending on the value of the house, the life expectancy of your Mum and the cost of the NH this can be for the whole cost of her care. This would mean that the tenants could stay in place generating an income.

    The money, the LA have in effect lent you, is payable on death or sale (or before if you want) and can be from any means. It does not have to come from the sale of the house.

    A DPA can incur costs and interest which the LA are not supposed to make a profit on but some like mine do not make any charges at all.

    I do hope some of that helps.

    :)
     
  3. PXland

    PXland Registered User

    Jan 22, 2016
    4
    #3 PXland, Jan 22, 2016
    Last edited: Jan 22, 2016
    Hi Pete

    Thx for the welcome and reply.

    To respond to your points:

    why is that you think that CRAIG applies and not The New Care Act? Why would this be going on since 2013? We started the contract agreements and assessment with the LA when my mum went into a nursing home in 2013 and CRAG was the regulation on place at the time. Its been sat on an admins desk in the LA for 2 years gathering dust...

    Just my mums half - thats the point, the trust does not allow me to sell my half, so her half is worthless. My half has her right to live there attached to is. As such the market value of 1/2 a house where someone has the right lo live in it at any time in the future is, at the point of assessment nil, as set out under CRAG.

    Top Ups - my mum entered nursing care at a point of crisis (the original resi care home couldn't cope and wanted her to leave) My choice was admission to hospital, sectioning or Nursing Care. The LA were useless and proposed no options (at any price let alone their limit). I searched all specialist dementia nursing homes in driving distance and only found one with quick availability and it was thankfully suitable for my mum.

    As such the LA have a duty of care to contract with the Nursing home (and cost or top ups are not the issue) or propose a suitable alternative (which they have not done) and financially assess my mum as required. The point is they need to accept the disregard of my mums house and then after the assessment will be what it will be but they should not see it as a loan to us secured against the house.

    Also on top ups, in reality we had no choice of home and had no LA support - A person must not be asked to pay a ‘top-up’ towards the cost of their accommodation because of market inadequacies or commissioning failures and must ensure there is a genuine choice. The local authority therefore must ensure that at least one option is available that is affordable within a person’s personal budget and should ensure that there is more than one. If no preference has been expressed and no suitable accommodation is available at the amount identified in a personal budget, the local authority must arrange care in a more expensive setting and adjust the budget accordingly to ensure that needs are met. In such circumstances, the local authority must not ask for the payment of a ‘top-up’ fee. Only when a person has chosen a more expensive accommodation can a ‘top-up’ payment be sought. 

    Thanks Pete and hope this stacks up to your understanding...

    Regards

    Phil


     
  4. Pete R

    Pete R Registered User

    Jul 26, 2014
    2,046
    Staffs
    #4 Pete R, Jan 22, 2016
    Last edited: Jan 23, 2016
    Local Authorities are great aren't they?:rolleyes:
    Most of it yes especially the obligations on the LA to provide at least one home to meet needs. The New Care Act certainly applies to your Mum on this point even though she has been in care for a number of years.

    The only thing I would challenge (and this is really playing "devils advocate" and with no gravitas) is your view on the property disregard.

    Yes the rules under CRAG say half a share is probably worthless. By that though they mean your Mum's half not yours. Your half cannot be assessed unless they are challenging the whole trust as being worthless since the time your Mum entered care.:confused:

    However since disregards are fluid and open to change I would say that may only apply pre April 2015. After that the LA may be able to challenge the disregard under the new rules and although your share is still worthless your Mum's share may have a value even if it is a notional one.

    Since the LA are refusing to help, which is totally wrong, then I can see no other way than you taking legal action against the LA. Even if you could go to the Ombudsman and they found in your favour the LA is not required to change it's view.:mad:

    I do wish you and your Mum good luck.

    :)
     
  5. PXland

    PXland Registered User

    Jan 22, 2016
    4
    Thanks Pete - I will post here with updates... As regards my mums half having value, I know what you mean but CRAG seems pretty prescriptive in how to handle this...
    We coul just put it to the market and see :rolleyes:
     
  6. arielsmelody

    arielsmelody Registered User

    Jul 16, 2015
    513
    Sorry, I don't have any experience or advice to offer, but I did notice this point - when did you consult your solicitor? Was it before or after the relevant part of the Care Act 2014 came into force on 1 April 2015? It's just that it seems to me that Pete R is right when he says that the Care Act applies now rather than CRAG, so if your solicitor gave you advice a few years ago it may no longer be the full story.
     
  7. Kevinl

    Kevinl Registered User

    Aug 24, 2013
    4,780
    Salford
    We discussed this back in May (link below) and at the time I said I could see a situation where the LA's would start to challenge these type of situations.
    Whilst trusts and similar set-ups were solely the province of the rich it was OK, now people on the street are getting into "asset protection" you can bet they'll put a stop to it pretty quick.
    As had been said CRAC no longer applies, it was one of the things cancelled by the new care act anything that happens will be under those rules as CRAC no longer exists.
    Nobody really knows exactly what the LA's rights are under the new act and until it gets tested in law, their "interpretation" of what the new rules are may differ from that of a judge, however, my feeling is that it won't.
    My feeling is the LA's are going to get a whole lot tougher about what constitutes deprivation of assents and this is only the beginning.
    K

    http://forum.alzheimers.org.uk/showthread.php?82659-CRAG-is-no-longer-applicable!!!!
     
  8. Pete R

    Pete R Registered User

    Jul 26, 2014
    2,046
    Staffs
    That is not entirely true. Although CRAG no longer exists some decisions made under it still hold today, especially with regards to deferred payments.

    My point is that property disregards are fluid and can be challenged by either side. Any challenge made since last April would be under the new rules but not back dateable.

    This is not a case of deprivation. Everything was completed well before care could have been predicted. It is more of a case of whether 50% of a property has any value. Under CRAG it did not but the new rules seem to say it can.
     
  9. arielsmelody

    arielsmelody Registered User

    Jul 16, 2015
    513
    As a layperson (and this may be completely irrelevant to the actual legal situation), I'm puzzled by the trust aspect of it. The original purpose of putting half of the house in trust and giving the mother a lifetime interest in living there (rather than leaving it directly to the child) was to protect the mother. She's now in a situation where she cant live in the house, and she can't access her own capital to pay for her care because of this trust. Isn't it in her best interests to end the trust to allow the house to be sold so that she can use her capital to buy a more suitable place to live (ie pay for nursing care), and is there no way at all that the trust could be challenged on that basis?
     
  10. Pete R

    Pete R Registered User

    Jul 26, 2014
    2,046
    Staffs
    There is nothing to suggest the Mother is not getting the best possible care or that sale of the house would provide any improvement. Don't forget any sale would also mean no more rental income.
     
  11. arielsmelody

    arielsmelody Registered User

    Jul 16, 2015
    513
    But I'm assuming that the rental income doesn't cover the full cost of her care, or else why would the LA be involved?
     
  12. Pete R

    Pete R Registered User

    Jul 26, 2014
    2,046
    Staffs
    It would appear not as the last paragraph of the original post suggests and a top up is being paid.
    :)
     
  13. garnuft

    garnuft Registered User

    Sep 7, 2012
    6,588
    But if she had access to her capital, she could pay her care costs.
    The issue really is about the OP keeping hold of their share, it isn't really about the person who needs to finance their care.


    Sent from my iPhone using Talking Point
     
  14. Pete R

    Pete R Registered User

    Jul 26, 2014
    2,046
    Staffs
    But how do you know that the Mother's costs are not being met?:confused: You are just making a massive assumption they are not based on no facts whatsoever.

    I see nothing wrong with someone protecting their legal right to property/assets they own.
     
  15. garnuft

    garnuft Registered User

    Sep 7, 2012
    6,588
    Because the OP has stated that the LA are trying to assume that the house should not be disregarded.
    That suggests to me that LA funding is going to be sought.
    If funds are met there is no need for LA input or opinion required.
     
  16. garnuft

    garnuft Registered User

    Sep 7, 2012
    6,588
    #16 garnuft, Jan 24, 2016
    Last edited: Jan 24, 2016
    And why should a house have NIL value to the state rather than to an inheritor?

    Nil is nil...I would rather the taxpayer benefitted, than these schemes continue.
     
  17. PXland

    PXland Registered User

    Jan 22, 2016
    4
    Hi

    Thanks for all your comments - really interesting points to consider. I will look at the old thread.

    I feel CRAG applies because my mums initial assessment was made under this (it was applicable at the time) and the LA have taken 2 years to respond to us so we are still discussing the same initial assessment. The assesment commenced under these regulations and should still be looked at as the same negotiatio, a new negotiation may well be under new rules.

    The issue of funding comes into play because without the house my mum is under the lower limit for assets and as such under the LA duty of care they should pay her costs.

    The principle is that regardless of my mums current position of being in a nursing care home I cannot sell my half whilst she is living - that's simply not an option open to us. So what is my mums 1/2 worth on the open market - i can't sell you my bit, you won't get a mortgage or perhaps even insurance and the net rental isn't enough to make it attractive.

    -garnuft you have a point but I don't agree, the rules are there for us all and I think it's more about the LA trying to avoid its responsibilities to care for my mum. My mum and dad decided decades ago to set this trust up to protect what they worked all their lives to build. If they hadn't bothered to do the best they could for themselves there wouldn't be a problem and the LA would just do their job properly. As mentioned I have found the LA to be deliberately misleading in their handling of this and are making a stressful situation worse...

    Once again thanks everyone (inc Garnuft :) ) and I will let you know how I get on...
     
  18. Pete R

    Pete R Registered User

    Jul 26, 2014
    2,046
    Staffs
    I would prefer the state having to fulfil its responsibility's to those that have paid their taxes and abided by the rules (what you call schemes) that they signed up to.
     
  19. Pickles53

    Pickles53 Registered User

    Feb 25, 2014
    2,482
    Radcliffe on Trent
    The problem is that taxes/NI we all pay are simply not enough to meet the increasing medical and social care needs of the population. So we either pay more during our working lives via taxation or the rules will change so assets can't be protected when we need care or the system will simply collapse. The only money the state has is what we contribute.
     
  20. Chemmy

    Chemmy Registered User

    Nov 7, 2011
    7,592
    Yorkshire
    #20 Chemmy, Jan 25, 2016
    Last edited: Jan 25, 2016
    When my grandad went in the care of the state in 1970, due to dementia, he was 'housed' in a dormitory in a ward in a mental hospital, 20 miles away.

    Expectations have changed, along with the costs, and free state care for all is simply unaffordable.

    My mother also inherited a few hundred pounds when he died. Expectations regarding inheritance have changed too in a generation.
     

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