The idea of retirement conjures up the prospect of more leisure time, lower tax bills and discounted travel. Yet all too often it means long-term illness and a battle to find the right care. And that is not just traumatic, but also seriously expensive – Saga calculates that the average cost of a four-year stay in a care home will double to £223,476 in the next 20 years. Anyone reckoning that the Government will cough up the cash for a care home (a fate awaiting one third of men and half of all women, says Age Concern) is in for a nasty shock. If you’ve got £22,250 or more in savings, you can be forced to pay for all of your own care. And given that, according to Home Capital, 78% of the average over-65-year-old’s wealth is tied up in property, you may well end up having to sell your house to do so, as 70,000 people have had to do over the last ten years alone.
So is there any way to avoid all this? First, says Emma Simon in The Daily Telegraph, note that your home is not at risk if a surviving spouse or partner continues to live in it, a rule that also extends to other relatives aged 60 or over. So if you can get a son or daughter to move in with you as a carer, you might not only save on the £13-an-hour private part-time home assistance would cost you, but save your home when the time comes to move into a carehome as well.
But if you have no spouse or relative, you can prevent a forced sale by the council. For a modest fee to cover, in many cases, an amendment to property title deeds, there is a potential solution, says Mike Warburton, a tax partner at Grant Thornton, in The Times. Most couples buy a home as “joint tenants”, which ensures that on the death of one of them, their share of the property is automatically transferred to the other.
But it is also possible for a couple to own a property as “tenants in common”, giving both parties the freedom to give their share to whomever they like on death. So, if a husband dies and leaves his, say, 50% share of a property to a “discretionary will trust” (that holds his share for the benefit of, for instance, his children), then the value of his wife’s share in the property may be ignored at the point at which she needs care.
That’s because Department of Health rules only give local authorities the right to value the surviving spouse’s “interest in the property… not the property itself” when means testing for care support. That interest, in turn, is deemed to be worthless because the value of the widow’s share of the house can’t be established via a sale until the surviving children and the trust agree to one. This might sound a bit fiddly, but if you want your family property to remain in the family, then it is well worth taking legal advice on.