IT seems that people spend their lives building up assets to make them more secure, only to spend their twilight years ridding themselves of assets to make their children’s lives more secure.
Nowhere is this more evident than in the world of nursing home and care home fees.
Understandably, people do not wish to find the cost of care home fees swallowing up most of their lifetime savings and assets, leaving little for the families they leave behind. On the other hand, if they lack the necessary funding, they do not wish to have fewer choices and inferior care.
Like life itself, the whole area of care home funding is neither simple nor straightforward.
Whilst free personal care is available in Scotland for everyone aged 65 and over who is assessed as requiring it, if a person has assets over £25,250, they are still expected to finance the “hotel” or “accommodation” element of any care home fees.
Cash-strapped local authorities are now looking very carefully at any transfer of property or deliberate concealment of wealth, and using the legal powers available to them to pursue any suspects and recover any sums due.
Leading charity Age UK is so concerned by the number of families trying to avoid care home fees that it has published guidelines warning of the pitfalls in signing over property. It warns that families may be embarking on a “risky act”, and budget-conscious councils are likely to look at cases where they think deprivation of assets may have taken place.
Local authorities are particularly alert to the transfer of property during a person’s life and will check the records at Register House and Council Tax registers to see when a property was transferred, to whom it was transferred, and whether a price was paid, to check whether there has been a deliberate concealment of that property.
Furthermore, there is no time limit as to how far back they can go to check on this.
If they uncover evidence that the property was transferred in an attempt to escape care home fees, the authority can force the family member to whom the property was transferred to sell the property and to use the proceeds towards any fees due.
Local authorities also have the power to reverse any transfer of ownership of a property back to the original owners if there is sufficient proof to show that a family deliberately set out to conceal a property from them. This means that once the house has been transferred back, it might then be included in any means calculation for the funding of a home.
With this in mind, any property owner would be wise to tread carefully before signing up to any scheme, such as an Asset Protection Trust, that claims to protect their home from being sold if they need to go into care.
These schemes are sometimes aimed at “sheltering homes” from being included when a local authority assesses someone’s assets to determine how much they should contribute to care home fees.
However, local authorities are now wise to such arrangements and are checking carefully to ensure that property owners are not using these trusts to deliberately deprive themselves of their properties to avoid using the proceeds for the funding of homes.
As each person’s situation and circumstances are different, so too must be the advice given to them. However, even if a property owner, after appropriate advice, is still tempted to transfer the family home, they would do well to take heed of a few further salutary points, before embarking upon this.
To transfer property is to give up control. Decisions such as selling, renting, capital-raising, or renovating their home are no longer open to them. Children and outside parties could start taking control. Children’s divorces, bankruptcies and repossessions could threaten the family home. Furthermore, children could find themselves liable for Capital Gains Tax on any sale if they already hold property in their name.
To those who don’t transfer, some comfort should hopefully be obtained from the fact that the home will be disregarded in any financial assessment in certain situations, one of these being if it continues to be occupied by a partner or spouse.
Furthermore, the fact that still only around 4 per cent of over-65s require the provision of nursing home care must surely give some perspective to this whole complex issue.
• Dianne Paterson is a partner in Russel + Aitken LLP www.russelaitken.com