Leaving house in trust question

[Lindz44]

This isn’t what I am doing. My mum has her own house and I’m more than happy for her money to be used for her care as and when she needs it.
I am just confused and I’ve looked online and I’m more confused, in discussion lately with acquaintances two people have told me that their houses are mortgage free and in trusts so when the time comes they won’t have to use money to pay for care. One has the whole house in trust and her daughter lives with her and she said it will just go to her children and they can rent it out, the other has her mothers house in a 50/50 trust and then only 50% of the property can be used for care.l
I was under the impression that even if you do that then the courts can force you to pay.
They care adamant that they are correct and have had legal documents drawn up.
Surely if it was that easy then everybody would put their houses in a trust?
also if it is true and they can’t use it for care then who funds your care as it doesn’t seem very fair to people who don’t have trusts or legal representation.
Neither of these people are wealthy and both houses are just normal semis albeit in an expensive area,

I hope they are not clients of McClure's
https://www.bbc.co.uk/news/uk-england-68070449

A family member was in a pickle because of a trust involving his parents' property, created on the advice of a solicitor who really wasn’t the best advocate. It was very stressful and complicated to unwind when his second parent died. It’s not a situation I’d want to get into. Especially now that charges have been introduced on trusts - you have to pay tax on them in certain circumstances. Every ten years, I think.

If the house is put in trust to avoid care costs, it can be taken into account and wil be. Ive just had two similar cases where the house was put into trust and the family wanted he council to pick up the care costs but were refused due to the trust deed

And bloody right too

Wow!

This is the thing both people told me they have been advised by solicitors advising them.

That’s the thing I don’t know why you’d put a house into trust unless to avoid care costs or inheritance tax. I dint know enough though.

Pil set similar arrangement up several years ago, so the half of the property belonging to whichever dies first passes to their children. Don’t the recipients start to accrue CGT liability from the point of inheriting their share though?

This whole area is very complex indeed. But there are some things to consider.

To start with the simple case:

"...the other has her mothers house in a 50/50 trust and then only 50% of the property can be used for care."

This is very common indeed. A married couple owns a house as "tenants in common" instead of "joint tenants".

"Joint tenants" mean that you both own the whole house jointly together (just like a joint bank account). So, on the death of the first spouse, the ownership of the house automatically passes to the surviving spouse.

If a house is owned as "tenants in common" then each person owns a separate 50% of the house and they can leave their 50% share of the house to whoever they want (normally, it is left to the children and the surviving spouse is given a life interest so that they can remain living there).

In a typical situation where a husband will die first and the surviving wife later goes into care this will protect 50% of the property from being taken to pay care home fees.
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"One has the whole house in trust and her daughter lives with her and she said it will just go to her children and they can rent it out"

This one is rather confusing. It depends a lot on how old the daughter (or the daughter's husband) are when the mother goes into care. If either of them are then over the age of 60 or are disabled then there is a "mandatory disregard" for the house anyway as there are "specified family members" living in the house as their main or only residence.

This doesn't require a trust at all (it just needs one person to be over the age of 60 or disabled).

Putting a property into a trust in this situation doesn't really seem to make much sense. Perhaps they were persuaded by some will-writing company that it would help them?

"...go to her children and they can rent it out"

This bit really does confuse me. How can they rent it out if they are living there? Something doesn't really add up about that.

I would just like to add that you shouldn't forget that relatively few people go into care homes anyway.

Today, if you are currently aged 65, then you can expect to live to 86 on average if you're a woman and 83 if you're a man (source ONS).

Of women aged 80-84 there are 4% in care homes, but this does double to 9% for those aged 85-89.

So, more than 90% of women do not go into a care home.

(the figure does rise dramatically for those aged 90+. The figure is 21%, so if you live past 90 you have a one in five chance of ending up in a care home, but a four out of five chance of not being in a care home)

The comparable figures for men are 2.5% for those aged 80-84 and 4.5% for those aged 85-89. So, only one man in twenty aged 85-89 is in a care home (and the average age of death for men is 83)

(source ONS)

It’s also in case one of you dies early and the other remarries. If your 50% of the property is in trust for your children, if the surviving spouse remarries they of course maintain day to day control over living there, moving, etc, but that half would not then be vulnerable to future gain by their next partner and/or other children involved 👌🏻

Trusts are complicated and can leave you in a difficult position

why on earth morally should you expect the rest of society to pay you care fees! (Not you)

It can be challenged if it’s a deprivation of assets

It can and probably will be challenged for deprivation of assetts, Authorities have people whose only job is to do this.
Some companies claim to be able to prevent this but they get clients to sign disclaimers so its not them who will get clobbered for tax.

Even if such a scheme succeeded in avoiding paying your own care home fees, you would just end up being put in a "relatively" cheap rest home not of your choice. Why would anyone do that?

Oh I would, 100%. I’d be so much happier knowing my children would benefit financially. Both my Great-Grandmothers remained in their own homes until almost 100, as they were adamant their homes were to remain intact for family, we all rallied round and cared for them. I personally cared for my FIL in his own home, as his anxiety about anything being spent which was for his 3 sons and 6 GCs caused him far more distress than the severe physical pain he was in (he couldn’t actually stand up for 6 months, but told me daily how happy he was to be in his own home protecting it for his family). I feel exactly the same 😊

Exactly, I would have been horrified if my Mum had needed care I would much rather she had sold her house to provide better care than me inherit it.

We are tenants in common.
We did it as soon as ds was 18 and we were 50. Doing it early is better as aged 50 we could not reasonably forsee care needs. We are still in perfect health now 12 years later and DS has forgotten all about it.
Everyone should do it. It also protects against a bereaved spouse leaving everything to a random person and forgetting ds.

Can I ask how you go about switching from joint tenants to tenants in common and how much this costs please?

It's very simple and there is no cost.

If both/all owners of the house agree to do this then you complete form SEV and post it off to the Land Registry.

This explains how to do it:

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

Thank you @Another2Cats

And leaves society picking up your care needs bill

dreadful attitude