Healys: Care for your assets
John Healy of Healys LLP
gives advice & information on legal matters
As Benjamin Franklin once said: “In this world nothing can be said to be certain, except death and taxes.”
My colleagues and I are often asked to advise in situations where an elderly parent or relative requires residential nursing care. There appears to be a mistaken belief that simply by transferring your property to your children or grandchildren you will avoid the requirement of paying for care.
You may choose to give money or assets to your children or grandchildren. There is no monetary limit on gifts to your children, grandchildren or other relatives, but they may have to pay tax on any interest or income they receive.
If you give an asset to someone within the seven years before you die, the person who receives the gift may have to pay Inheritance Tax on it. However, transferring ownership of an asset to another person specifically to avoid paying your care home fees will not work!
“Transferring ownership of an asset to another person to avoid paying your care home fees will not work!”
A Local Authority can go back years to find out if you have given away assets specifically to avoid paying care costs. If this is found to have happened, the Authority can treat you as if you still had the asset and you will have to pay for your care accordingly.
If the transfer was made within six months of you needing care then the Authority can recover the cost of your care from the person(s) who received the gift.
The legislation also provides that if you’ve transferred an asset to another person within the six months before you get a place in a care home, your local authority can make you pay your care home fees.
One alternative to selling your home may be to rent it out to tenants and use the rent to pay your care home fees.
Before you move into a care home permanently, it is desirable that you should plan for any inheritance tax issues and who will inherit your estate. Making a Will is essential. The setting up of a Family Trust may also be prudent.
Please contact Sue Peck at Healys LLP susan.peck@healys.com or, alternatively, call 01273 685888.
John Healy is a Solicitor and Chairman of Healys LLP
of 8-9 Old Steine Brighton BN1 1EJ.
