Will / trust avoiding care home fees

[BasiliskStare]

1. I am asking for opinions here - I will seek legal advice or advise my brother to.
2. I am not asking anyone to give me a definitive answer - but advice welcome .

My brother has asked me to be executor to his will and read it. He has explained that the solicitor ( they found then with a a stall at a fair ) . The solicitor has drawn up a draft will where on the first deceased person ( DB and DsIL have no children ) the house and assets go into a trust for the benefit of the spouse.

BUT it sounds like the Trustees who are these solicitors have to agree to house being sold etc.

My brothers estate as and when isn't worth a great deal (estimate and he has told me so )

How it seems to be have sold to him is that if they put house money & other assets all into a trust it protects them from having to pay care home fees. But the Trustees ( which is this firm , have to agree to any sale of house ( not necessarily care home but just generally for just even moving house for surviving spouse. )

I don't like the sound of it and given I am going to he an executor - I am going to take advice.

Do you think I am right in being sceptical about this. ? I just think this is something DB has been " sold" .

Basilisk

It's certainly a scam

My aunt has done something similar.

They are tenants in common rather than joint tenants which means they own half the house each. The house can only ever be sold for fees when neither live there.

On the first death their half of the house goes into a trust for the kids. If the second goes into a home the house would be sold, half goes to kids via trust and other half to fees.

It sounds like one of the less hairbrained schemes to me.

Thanks both - in DB's and DSIL's situation they are joint tenants and they have no children.

I do worry that this is a product this company is pushing and I am not sure what benefit it gives them The company will be the trustees and will have to agree to any house sale etc. Which I think gives surviving spouse less autonomy.

Any other advice gratefully accepted - but thank you both - genuinely. Given I am going to be an executor I would like to know I am signing up to something "proper" . But in the end it is my DB's and DSIL's choice

I had a meeting with my dad and his lawyer re POA and part of that discussion was the possibility of putting the house in trust. The lawyer explained (Scotland) this does not 100% guarantee the house will not be sold to cover fees if dad was to go into a care home. The local authority can go to court to force the sale of the house to cover fees.

If they had DC and wanted to use a fancy trust agreement to protect the value of their house to pass down to their children rather than use it to pay care home fees then I'd understand it. Not necessarily agree, but understand.

But if they don't have children why are they so bothered? Once the last survivor goes into a care home why would they care about the house being sold? Do they particularly want to leave the house to you? or a vulnerable niece/nephew?

Unless there's some very specific reason why they'd want to leave the house to a sibling this sounds like upselling by a solicitor who fancies the fees for managing the trust.

Thank you both last posters -

The company is based in Glasgow - DB lives in North of England

This @AuntyEntropy - I exactly what I am worried about - I think these people are trying upsell .
and@oOiluvfriendsOo - I've read this also - it is not at all guaranteed re care home fees

They don't have children - they have nieces and nephews - on our side we have said spend your money on your self - one other DSIL is constantly - who are you leaving your money to.

I am very very appreciative of opinions

Given I am being asked to be an executor I will research as best I can - it's their choice but I do worry they are being upsold something they don't need and may not be to their benefit .

Thank you all

The overall plan of the trust is fairly standard asset protection planning and does work to protect the half of the assets of the first to die. It is not the same as giving the house away in your lifetime which would be ‘intentional deprecation of assets’ the one giving their half away has died so they are not depriving themselves. 2 things though do sound a bit worrying.

1. They found the ‘solicitor’ at a stall at a fair? Are they actually a solicitor and not a ‘will writer’ they are not the same thing and not regulated in the same way. they should be seeing a STEP qualified wills specialist solicitor.
2. appointing themselves as trustees. Often the executors become the trustees. Are you also a trustee? What information have they been given on the ongoing running of the trust? And the costs? Was it discussed why they as professional trustees were needed? If there are competent family/ friends then they can be the trustees and seek legal advice if they wanted. The advantage being can shop around for quotes and service and not tied to this firm.

I am an adult social worker. If 1 person remains living in the home and the other person needs care. The home cannot be sold.
It is classed as a mandatory disregard. I’m not sure why they are being told the home could be used to pay care fees if only one person does require residential care. If both need residential care the local authority can then sell the house. Hope this helps sum what.

This. A house can never be sold to pay for fees if there is someone still living in it.

The only purpose of splitting the ownership into tenants in common and leaving part of the house in trust with the surviving spouse having a life interest, is for inheritance purposes. You are ensuring that if the surviving spouse goes into care, then the full value of the house won't be used for care fees, only their half.

It's often recommended but I don't like this because:

• I feel the surviving spouse should be able to use the full value of their house if they want to when choosing a care home. They shouldn't have to scrimp on care because their money has already been given away.

• if my spouse dies, I want to have full control of my money (and vice versa) to use as I see fit. I might want to se my house and sail around the world!!! lol. If there's any left to pass on then that's a nice to have.

"Do you think I am right in being sceptical about this. ? I just think this is something DB has been " sold" ."

I would agree. There are some aspects that could be beneficial but the one big red flag for me is where you way:

"...the Trustees who are these solicitors"

You don't need solicitors to act for you in this situation, they are just looking to get extra fees.

I would very much ask the same questions as @22mumsynet :

"Are you also a trustee? What information have they been given on the ongoing running of the trust? And the costs? Was it discussed why they as professional trustees were needed?"

It sounds quite dodgy indeed. There appears to be no reason at all for professional trustees.
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"...the house and assets go into a trust for the benefit of the spouse."

It is not unusual for a married couple to do this when they are worried that care home fees might take up all the value of their home and they wish to leave some to their children or other beneficiaries.

The first step is to ask your brother and his wife if leaving an inheritance to whoever they are leaving it to (eg a charity or nieces/nephews) is very important to them or not.

If it is important then this may be worthwhile doing, but with yourself as a trustee, not this company. For example, my parents did this. They changed the ownership of their home from joint tenants to tenants in common and then, in their wills, each left their 50% of the home in trust to us children with a life interest for the surviving spouse. My sibling and I are the trustees.

In the case of your brother and his wife then they would each leave 50% of the house in trust to whoever they want as beneficiaries and then you and another person would be the trustees. There is absolutely no need to get this company involved with that.

In contrast, if there is no one in particular that they are concerned about leaving their money to then @NotVeryFunny makes some good points above about why it's likely not necessary.

Also, don't forget that only a small proportion of people (especially men) ever go into a care home at all. The large majority of people die without ever going into a care home.

In summary, I don't think this will, from what you have said about it, is a very good idea at all.

It's a fairly standard way of protecting the assets of the householder if they never go in to a care home. E.G

Granny & Grandad own property 50/50. Granny dies, she was never in a care home, her 50% of the property goes into trust. Grandad ends up in a care home, house sold. Granny's portion of the funds can't be used for care home fees.

But, any Solicitor can write this common will set up for them. And, if they have no kids, would it not be better for them to fully fund a care home of their choice rather than one of Social Works choice?

If they own the house as joint tenants, any provisions in the will putting the house into trust when one of them dies have no effect. The house will automatically belong to the surviving spouse and will not form part of the deceased's estate. This type of will only makes sense if they sever the joint tenancy and own the house as tenants in common, so they each own 50% of the property. In that situation, the surviving spouse would be the only person living in the house, so it could be sold to fund their care. Putting the deceased's 50% into a trust like this ensures that it cannot be used for care home fees and that it eventually goes to whoever they want to inherit, regardless of whether the surviving spouse goes into care, remarries, etc. In this situation, the house clearly could not be sold without the permission of the trustees since the trust owns 50% of it. However, they cannot unreasonably withhold permission.

This arrangement is normally used to ensure the children inherit at least 50% of the house. As they don't have any children, this may not be appropriate for them unless they want to guarantee an inheritance for someone else. Even if it is appropriate, they should seriously consider appointing someone other than the solicitors as trustees.

I guess the other reason you'd do it would be if one spouse had bought the house with "family money" inherited from their parents, and felt that it's right that after both of them had died the money returned to their side of the family rather than going to the siblings of whichever spouse happens to survive the longest. It's quite a blunt instrument though for a normal sized estate.

Why is a lawyer from Glasgow writing a will for someone in England? The law is different.

Thanks all

I have read the will again and the solicitors firm is a trustee but also as it stands so would my son be - so they are not sole trustees . But what I don't like is that the trustees have to agree to sale of house etc . Also given they have no children , they still would like to leave some to nieces and nephews - which is their choice - but surely if you can't use your house for care home fees ( even if this works ) you are left with very little choice as to where you end up.

My son is a lawyer ( not wills etc - not his area ) but given he is being asked to be a trustee and also signatory on LPOA ) he is going to ask around some of his lawyer friends who may know better than he. But he'll be able to read it and give a decent perspective.

From our perspective given DS is one of the nieces and nephews who would be ultimate beneficiaries - we ( and he ) really don't want DB & DSIL jumping through hoops to save some money they can otherwise spend on themselves - DB's in laws may be ( I think are ) different.

For context DB is late 50s and my DSIL is late 40s. & their estate is modest at the moment

But thank you all - you have given me some good questions to ask

I appreciate it.

Am I missing something here - if only one of them goes into a care home and the other lives in their house it can’t be just sold from under them. If they both move into care or sheltered accommodation then the proceeds of the house will be used up to the threshold for savings. They don’t have kids so that makes sense

@Printedword - No I don't think you are missing something . I take that as well. What worried me is the structure of this thing seems to be on the first death the house and assets will go into a trust where both trustees agree - one will be my son - the other the solicitors but I fear this will be expensive and leave the remaining spouse with fewer options about using assets themselves without having to ask.

If they both had to go into care then yes I suppose the house would have to be sold - but surely this would give them the option to be somewhere nicer of their choice rather than wherever the council say they have to go.

Also just to say the estate is modest - it wouldn't even touch the sides on current IHT rules.

I am not a lawyer but I have read contracts before I retired & I am not sure I'd sign this. DS is a lawyer ( not wills ) but he is going to have think about any of his friends who do specialise there he could ask. Given he will be a trustee and LPOA also

My brother is late 50s but to me he will always be my younger brother and he has asked me for help. Plus ca change plus ca mem change. 😊

Thank you all

the trustees have to agree to sale of house

See my previous post. If they have severed the joint tenancy so that 50% of the house goes into the trust when one of them dies, the house can only be sold if the will contains a clause allowing the survivor to do so with the consent of the trustees. Absent such a clause the house could not be sold at all.

surely if you can't use your house for care home fees ( even if this works ) you are left with very little choice as to where you end up

As per my previous post, this will only work if they have severed the joint tenancy. In that situation, 50% of the house will go into the trust when one of them dies. The other 50% would belong to the surviving spouse and would be available for care home fees. If your brother and his wife want to ensure that they leave something to their nephews and nieces regardless of what happens to them, this is the way to do it.

The advantage is that half the estate definitely goes to each side of the family.

Normally when a childless couple die all their money goes to the siblings/niblings of whichever happens to die last, and the other side's family gets nothing. Obviously you could make mirror wills splitting everything between both families but they could be changed. A trust would keep things "fair" between the two families if you feel strongly about that.

But for a family below the IHT threshold it's a pretty extreme solution.

They could end up in a situation where the surviving spouse needs to go into care, the house is sold by the trustees (which is not a simple quick task) and the spouse ends up in some godawful home as they cant afford to self fund. Meanwhile, just so that their niece can have a small inheritance, the residents of the Local Authority where the spouse lives will have to pay towards their care home fees.
Morally, this is pretty awful.

prh47bridge sums up the situation in the post above. However, I'd just like to add a couple of extra points.

"...they still would like to leave some to nieces and nephews"

In that case it does sound as though this will may be appropriate. Your brother and his wife will need to sever the joint tenancy and send a completed form SEV to the Land Registry:

https://www.gov.uk/joint-property-ownership/change-from-joint-tenants-to-tenants-in-common

"...the solicitors firm is a trustee but also as it stands so would my son be"

This is still the big issue that I have with this will and getting this firm involved as a trustee at all. Just why?

Your son sounds more than capable enough to be a trustee. Instead of this company as the other trustee I would suggest that the other spouse is included as well.

So, on DB's will he nominates your son and his wife as trustees. On the wife's will she nominates your son and DB as trustees.
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"...but surely if you can't use your house for care home fees ( even if this works ) you are left with very little choice as to where you end up."

This just shields 50% of the value of the home from care fees. If you are joint tenants then you both own the entire home equally - like a joint bank account.

If you are tenants in common then you each own a separate, distinct, 50% share of the home.

If one person goes into care and their spouse or partner (over the age of 60 or disabled) is still living in the home then the value of the home is disregarded. So it is likely that there would be no fees to pay anyway.

A typical scenario for care home fees might look like this.

If they are joint tenants. Your DB passes away and the entire house is left to his wife. In later later years, his wife then goes into care. Since she owns the house entirely the council can take into account the entire value of the house when deciding on fees (they don't take account of the whole value but a certain percentage). His wife will be liable for fees until her assessed capital falls below the limit.

If they are tenants in common. Your DB passes away and his 50% share of the house is left in trust to his nephews/nieces and his wife is given the right to live their for the rest of her life. She later goes into care but this time the council can only take into account her 50% of the house when deciding on fees. The other 50% is held in trust and protected from being used for fees.
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Also, don't forget that relatively few people actually go into care, especially men.

At the time of the census there were 11 million people in England and Wales aged 65+ (6 million women and 5 million men). According to the ONS there were 280,000 in care homes.
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Although, your DB is slightly younger than this, the figures won't be too different.

According to the ONS, if you live to the age of 65 then your life expectancy at that time is 83.6 for men and 86.1 for women.

What this means is that, if you are still alive at 65 then you have a 50/50 chance of making it to 86.1 as a woman.

For those women aged 80-84 only 4% are in a care home. So 96% of women this age are not in care.

For those women aged 85-89 there are 8.7% in a care home. So more than 91% of women this age are not in care.

The figures do increase from the age of 90. For those 90 or older there are 21% in a care home. But that still means that 79% of women over the age of 90 are not in care.
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The figures for men are even lower.

For men aged 80-84 only 2.4% are in care. So for men, with a life expectancy of 83.6, there are 97.6% who are not in care.

The figure rises to 4.6% for those aged 85-89

"...and the spouse ends up in some godawful home as they cant afford to self fund."

Apart from the very most expensive care homes you will find a mix of self funding and stated funded residents in all types of care homes.

Around 49% of people in care homes for older people are self funding and about 40% of people in care homes providing dementia care are self funding.

Most care homes are rated as "Good" and here there are 42% self funded - so 58% state funded.

A much smaller number are rated "Outstanding". In these homes there are more self funded residents, 56% and only 44% state funded.

For those homes rated "Requires Improvement" or "Inadequate" then the proportion of self funded residents is lower at 33% and 26% respectively, but there are still plenty of self funded residents in these homes.

So, self funded residents are more likely to be in care homes that do not provide dementia care and are rated as Outstanding. But, even then, it is still only just over 50% which means that there are also many state funded residents there as well.

Source (ONS: Care homes and estimating the self-funding population, England: 2022 to 2023)

A few years ago l was doing my Will with a willwriter, not a solicitor. What sounds like something very similar was offered to my husband and me. We live in SE England, but the actual solicitors who were going to be trustees were in Scotland.
We very nearly signed for it, backed out at the last minute, and l was so very glad we hadn't signed when my husband died, things had changed anyway. It's not like a Trust with relatives.
I suspect the Willwriter received a fee from the solicitor and l remember paying something to get documentation.
When that solicitors firm shut down l received a letter from another solicitor, also in Scotland, saying they had taken it over. I had to reply saying that we had not actually signed the documents.
I have always felt it was a bit of a scam. I would be interested to know what you find out.

Thank you all

I have some things to look at

Very appreciative of all comments

Basilisk

Making a solicitor a trustee for anything other than a massive estate is bonkers. Their fees will eat up all the money. And as someone who goes into care homes as part of my work, I wouldn't put my dog in most of the ones that the council will pay for. You very much get what you pay for.