Putting a house in trust

[LezUlez]

Hi, this is my first thread so I apologise in advance if someone has posted about this elsewhere, I didn't see anything.

My DH and I are making our first will. We are both in our 60s. The solicitor is keen that we put the house in trust. He says that this will protect kids and help us avoid care home fees. I am bothered though, that the house wouldn't legally be ours anymore but belong to the trust. I feel that legislation could change the care home thing in future anyway so that the model is different.

Has anyone gone down this route and found pitfalls? Or is it something to be recommended? I know that if I'm the survivor I would certainly not remarry. I think it's unlikely for my DH as well but no one can be sure I guess.

Thanks for your comments, and btw I'm not saying that I am determined to dodge care home fees, but this has been suggested by the solicitor.

Not a lawyer.
Personally I'd be wary.

I know somebody who has just done this at a cost of several thousand pounds. I'm not convinced that the local council will not determine that it is deprivation of assets.
Would be interesting to know if anybody has experience of this in reality and what happened.

People on here often says trusts are a nightmare

Its my understanding it’s the only way to avoid your home being sold for care home fees tho so I shall be doing something similar

State in your trust that the beneficiaries cannot be changed upon the death of either you or your husband regardless if they remarry or cohabit

If the only reason for putting your house in trust is to avoid fees then its deprivation of assets. There really aren’t many decent reasons for trusts to adults.

the current popular option to avoid all of the house going for fees is to become tenants in common and each leave your share of the house to you kids on your death - in trust until the other one dies. This means that unless you both end up in care at least half of the house will be passed on. It seems entirely reasonable.

and also consider whether you’d rather be in a nice care home or a minimal one.

I’m kind of in the opposite position in that we had to sell my dms house to pay for her care home fees. We’ve been able to choose an amazing place where she is well cared for - I don’t think we’d have had that option if we were in the hands of the local authority.
I’d much rather the house she worked hard for was used to pay for this, rather than kept in a trust so that I and my siblings could benefit financially.

I work in funding for adult social care. When I was getting my will done the solicitor was pushing for this. It is in their interests to push this as they charge more for it than a simple mirror will. We did not put our house in trust.

Sounds like they are trying to squeeze a bit more money out of you. If you create the trust solely for this purpose, the council can absolutely class this as deliberate deprivation of assets - it's not uncommon for people to try this & they're very much onto it.

I’m not a lawyer but have heard first hand that trusts are expensive and fraught with problems. I would avoid.

Why are the sane people who are scathing about people on benefits also often the same people who think nothing of renting on the state for their care home fees?
How is this cognitive dissonance so strong in them. Like they don’t see the irony. They think they’ve ‘earned’ the right to have the taxpayer pay for their care. But they think it’s wrong for the taxpayer to help out other people earlier in life

The difficulty for the lay person is in distinguishing between (a) reputable advice from a trustful advisor and (b) being sold something inappropriate by a lawyer/salesperson.

It is not uncommon for trusts to be ‘sold’ to people who do not understand them. If you don’t understand trust law you probably should not proceed.

Where to begin: gift with reservation of benefit, deprivation of assets, taxation of trust assets, entry charge, exit charge, 10 year charge, trust registration, liability to capital gains tax, no control over care placement, grief for executors, cost of professional trustees and ongoing advice, house insurance problems, mortgage problems, loss of control, problems if house move wanted.

Thanks for your thoughtful advice everyone. Funnily enough as soon as I created a thread, I saw previous similar ones suggested! So I have had a look through them all. The balance of opinion is negative. I do think there was an element of up selling from the solicitor tbh. I can foresee that should my DH be the survivor, he and my DC would find dealing with a trust complicated and stressful. So I hope DH will agree with me that we shouldn't go down this route.

I’m shocked a solicitor suggested it!

so morally wrong

Why should the rest of us pay for your care home????

If the solicitor is talking about putting the house into trust now then I agree that this is totally the wrong thing to do.

In contrast, there is something that you can do that will protect half of the house if either of you were to go into care.

Most homes are owned by a couple as "joint tenants". This is where you both jointly own the whole house (just like a joint bank account). So, when one of you passes away the house automatically goes to the surviving spouse.

The other way to own a home is as "tenants in common". In this situation you each own a separate 50% of the home and you can leave your own 50% to whoever you like.

What typically happens is that each spouse leaves their 50% of the house in trust to their children and gives the surviving spouse a lifetime interest to carry on living in the house.

This trust only kicks in after the person has died.

What it does mean is that if one of you does go into care then the other 50% of the house is protected from being used to pay for care home fees.

Bear in mind as well that the vast majority of older people never go near a care home

www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/ageing/articles/olderpeoplelivingincarehomesin2021andchangessince2011/2023-10-09

I’m a willwriter and always advise against these lifetime trusts. They’re very expensive to set up, incur annual fees and often don’t protect against care home fees anyway.

two very big firms who made thousands of these trusts have gone bust in the last couple of years, leaving a big and expensive mess for their clients.

what would, however, be worth considering is a life interest in possession trust, which is made within a will, and so only takes effect on the first death..

this ringfences the first to die’s share of the property for (usually) the children, allowing the surviving spouse to live there for life.

if the survivor ends up going into care, they still pay their fees from their half of the house, quite rightly, but because they don’t own the other half, at least the children will get something.

excuse typos, writing in haste.

Also bear in mind that If a house is lived in by a spouse or partner it is automatically disregarded for care home fees
https://www.ageuk.org.uk/siteassets/documents/factsheets/fs38_property_and_paying_for_residential_care_fcs.pdf

Agree, it is absolutely wrong that firms are still flogging these lifetime trusts.

i personally think of them as little more than a scam, but spend a lot of my time explaining to clients why they shouldn’t be doing them just because Derek next door told them it’s a spiffing wheeze 🙄

Ensure you can update the trust if you do it, I would not. My parents trust caused an irreparable estrangement from my family

If it's a lifetime trust - often referred to as a family protection trust - nd your principal residence, don't do it. While yes you do not need probate to deal with it, it fails the CRAG test for deprivation of assets and yes you loose control. Look up mcclures/Jones whyte for further info.

If it's a liferent trust in a will, then absolutely consider it. One half share gets wrapped in the trust for the benefit of the survivor of you. Should the survivor need care, only their own one half share of the house is taken into account for care home fees. The share wrapped in trust passes to the kidsoon the death of the survivor or other specified triggering event so that they get something to inherit even if all of the rest of the survivors assets are swallowed up in care fees. It also means that the one half share in trust is protected against a subsequent marriage for the survivor who dies and by accident or by design, their estate passes to spouse no 2 disinheriting the kids from the first marriage. It doesn't solve any inheritance tax problems though. Liferent will trusts are fairly standard tools for succession planning. Your solicitor should be able to talk you through the options.

My neighbour did this and she slipped down the stairs and hurt her back so ended up in a care home. She had no say at all in where she went and she ended up in an awful place and died six months later It was an incredibly sad end for a woman who had been a head teacher. It caused some quite negative talk in the neighbourhood too as it was quite obvious that she was in a home that she would not have chosen to be in.

So go for a liferent trust not a lifetime trust...

Whats the difference?

So my mother did this her 70s - via her financial advisor - so that if she needed to pay care home fees her house would be outside her estate. My brother and I were the trustees - as I recall as trustees we couldn’t sell the house, or evict her etc etc - not that we’d have dreamt of it! She retained all the control.

She died in said house aged 90 without having to go near a care home, and for inheritance tax purposes the house was included in probate. I guess this was a while ago but it was a fairly benign, inexpensive process and simply meant that whatever happened the - modest - family home could be passed to her children rather than be sold for care home fees had she needed them.

I have no qualms about this, particularly while putting three children through university…

Agree. I would want the same for my dad.

Hope you don’t mind me jumping on - maybe someone on this thread would be able to point me in the direction of the info I need?
My mother recently died, father still alive - & they’d done the tenants in common her half of the house goes into trust in her Will (which DH & I are executors for). We & siblings are trustees but it’s to be used for benefit of dad while he’s still around - although it’s a discretionary trust which I understand to mean we can take her wishes into account but legally do what we like (not that we will do anything other than she intended)
She was adamant everything was sorted & no more money needs paying to solicitors etc - but we’re struggling to determine for sure what we need to do (if anything) at this point.

Do we need to set up the trust? Or it just exists now following her death as per her Will?
do we need to register the trust anywhere?
Presumably we need to advise land registry re ownership change?
If relevant, it’s below IHT residence threshold & all her other assets (a bit of savings - still below iht levels) go directly to her husband, so we don’t believe probate is required
Thanks in advance for any help / pointers to the info we need!