Property in Trust to avoid care home fees

[ClawsandEffect]

I was talking to a friend the other day and she mentioned she is putting her house in a trust for her son, so it can't be sold for care home fees later, should she need them.

This isn't possible, is it? I thought the LA could claw back even many years later to fund care.

https://www.mumsnet.com/talk/am_i_being_unreasonable/4922660-putting-house-into-trust-to-avoid-care-home-fees

How will she pay for care though if she needs it?

I didn't want to ask that. It might have come across a bit critical. I did say I thought the LA could claw back.

Tax payers will pay for her care, just as they do for thousands of other people, every year.

you have to be in a ridiculously sorry state before they will fork out for a care home. Someone I know did similar but her DP left the house to a charity. She essentially lives in a little triangle of chair bed commode all in the sitting room. Carers in and out 4 times a day for 15 minutes. She is really unsteady and lonely and would love a care home with people to talk to and endless cups of tea. Social services have said she doesn’t “need” a care home so she is stuck.

Money/ assets buys you choices.

I think it’s legally possible but has loads of caveat but it’s morally wrong imv

Not a cats chance of this working. Its called Deprivation of assets and no amount of clever trusts are going to stop them getting the money.

I don't know. How would the local authority prove there's been a deliberate deprivation of assets if someone puts their property in a trust?

Does anyone have experience of this?

I thought there was a case about this recently where they were being judged as deprivation of assets - lots of people using the same company to setup the trusts that promised something ridiculous (as ever … if it sounds too good to be true …)

Nothing wrong with this, just do it when you are healthy. Where will you live?

We were joint tenants of our property but in re doing our wills recently we were advised to change it to joint tenants with each of us leaving our share of the house (50%) in trust for adult DS with a lifetime interest for the surviving spouse. This means that if one of us remarries after the other has died then DS still gets something on 2nd death (should the parent who died last leave everything to their new spouse). A side effect of this is that the 50% in trust can not be taken into account for care fees as the law stands now.
Deprivation of assets is usually based on whether or not it can be proved that assets were vested elsewhere with a specific purpose of avoiding them being used for care costs AND at the time it was done, it could reasonably be foreseen that care costs were likely. So if you're a healthy 60 year old and put assets in trust then it would be hard for the LA to prove you did it deliberately. If you're 87 and frail then they'd obviously have a good case.

Sorry, that should say we changed from joint tenants to tenants in common.

It's not hard at all.

LA would go back through the history of the creation of the trust and when the property was transferred via the Land Registry.

They would look at banking activities to ascertain rental payments to the Trust for the former owner to live there and the age of the original owner when this was all done.

It's actually really easy to prove because there's a very clear pattern.

If it were appealed in court it would be decided on a balance of probabilities because it would be a civil case, and the probability of it being a deprivation of assets would be very clear.

People think they are clever but it's a very well trodden path.

It’s possible but needs to be executed long before any potential care needs arise and means you have no choices. The local authority safety net is very basic and only kicks in for very high needs

Thanks for clarifying, but I think it's less likely to prove if the asset is put in a trust early?

My husband and I recently wrote wills with a solicitor, and she suggested something along these lines, so it is definitely a thing, and presumably fully legal if suggested by a reputable professional.
We turned the idea down though.

They are much more on top of deprivation of assets now because the cost of social care is so great.

My question is are you happy to have no choice in your care, where you live or who you live with or how close you are to your family.

I’ve always wondered why people seem so keen to not pay for the last place they live … if you consider it as the next (last house) move you’ll make, think of it as an expensive housing cost that includes you food & bills not taking away someone’s inheritance.

Yes care is eye wateringly expensive but also most people’s care needs once they need them cost quite a bit to service - it’s a fact of life. If we leave all those costs to LAs then our taxes rise and the care is sub par/bare minimum

My mum is in end stage Alzheimer’s & her second care home (increased needs), thank god we had a house to sell (not a big one but enough) as it gave us choices we wouldn’t have had.
Her CH is not fancy but we got to choose somewhere with a nice room & great staff and we got a choice & some control that you don’t get when the LA has to pay.
inheritance would be nice but mum needs her money now so that’s what it’s for

There's a bit of confusion on this thread between 2 types of trust.

Some companies sell lifetime trusts, and persuade their clients to put all of their assets into this type of trust with a promise that the LA can't force payment of care fees. This is legally very dodgy ground, and the two biggest firms which sold these trusts (at very high charges) have gone bust, leaving a lot of clients in a mess.

There is absolutely no guarantee that the LA won't successfully challenge a lifetime trust set up in a way which was clearly meant to avoid care fees.

The other type is a Life Interest in Possession trust; this is set up within a will, and only takes effect on the first death. Because this type of trust only ringfences the first, deceased, spouse's share of the house, if the survivor goes into care, they do of course have to pay for that out of their share of the house, but the first-to-die's share is held by the trustees, so although it can only protect half of the value of the house, for many clients, it's worth doing.

TLDR:
Lifetime Trusts=Potential scam, don't do it.

Life Interest in Possession Trust, (aka Flexible LIT, Property Protection Trust, Immediate Post Death Trust) = sensible for many clients, depending on circs inc what other assets are available.

Lots of people do it and I think it’s going to be recognised as a trick sooner or later, and over ridden. Can’t see why it wouldn’t be

It might be legal, but it’s not ethical or moral. And her son could chuck her out at any time. Plus she wouldn’t have any choice about care homes if it comes to that.

Why do people want to make themselves pathetic charity cases when they could have choice?

And why does anyone think us tax payers should pay for their home?

Why do people want to make themselves pathetic charity cases when they could have choice?

Perhaps because they know that chances are that as a potential self-funder, they'll end up in the same home as someone who hasn't paid?

I wonder what would happen if the NHS/LA started refusing to provide free care.

It’s definitely possible, my DH & I set this up years ago. Of course your children can’t evict you 😂 if one of us dies before the other, the living one is guaranteed lifetime living rights in the house as a whole. You also don’t need to tell your children they technically own half 😜

Each of us see our half as rightfully our children’s. We have already paid tax and done everything responsibly related to our home. We’ve never claimed benefits, never owed anyone any money or defaulted on mortgage payments. What incentive is their to pay off your home for your children?

Both of us agree that if one of us died, it is fair that the remaining one only be assessed on their own half. I don’t want my DH’s half, I would happily rough it in a less pricey care home/stick it out in our own home for as long as possible anyway, like my dear FIL did.

Look at what the NHS/care is like now, what on earth will it be like in the future? I don't know why you wouldn't want some control tbh & think it's a crazy thing to do.

Some of my relatives paid for live in private carers for 18m because the state offer was so bad. They died happy & comfortable though.