Are you worried about your home and assets being taken to pay for care fees in the future?

 

Would you like to know more about protecting the things you’ve worked hard for?

 

Are you concerned about losing a chunk of your estate to HM Revenue and Customs for Inheritance Tax and other “death taxes” after you pass away?

 

Would you like me to assess your present liability for inheritance tax, applying any reliefs which are available to you and see whether there are steps you could put into place now to reduce, or remove some tax liability, leaving more of your estate for your chosen beneficiaries?

 

You might be under the Inheritance Tax threshold at present, but are you expecting the value of your assets to increase significantly, because you know you will inherit from another person’s estate in the future?

 

How Can I Help?

 

I can take you through the various options which are available for reducing the liability of your estate to post death taxes, and ways in which you can dramatically reduce the risk of you home and other assets being used to pay for care home fees, should you need this in the future.

 

Once we have discussed your personal circumstances, your ideal goals and the value and type of assets which you own, I ensure that my advice is specifically tailored to your individual circumstances  

 

I then give you as much time as you need to think about putting the advice into place, and to ask as many questions as you like, with no obligation to proceed.

 

In the more complex matters, where there are numerous types of assets, including those which generate income, it is standard procedure for any Solicitor to advise their client to seek more specific taxation advice from a suitably qualified individual, as Estate and Trust taxation calculations can be very complex.

 

Ask me for a FREE Dove Legal information leaflet about any of the following:

 

• Making Lifetime Gifts

• Gifting or transferring your property

• Care home fee information 2025

• Severing your Joint Tenancy

• Types of Trust – a brief overview

• Inheritance Tax rules, reliefs and CGT

 

 

GIFTING OR TRANSFERRING YOUR PROPERTY

 

Some people decide that they might want to make a gift of their home to their children, other relatives or unrelated third parties.

 

There are many reasons for considering making an outright gift of your property, however, the general advice is to proceed with great caution, as you may ultimately lose control of the property, even if you gift your home to someone whom you trust completely.

My free information leaflet on gifting your property gives a more detailed account of this option. Please request one if you would like to know more.

 

There are other, less risky ways to gift your property and assets so please ask me for some free initial advice.

 

Lifetime (Living) Trusts

 

A Lifetime or Living Trust is a type of Trust that you (the Settlor) create whilst you are still alive. It is sometimes referred to as a Property Protection Trust, because it usually involves placing significant assets, such as your home, into the Trust.

 

There are different types of Lifetime Trust, including Discretionary Trusts, Bare Trusts (usually created to protect a child’s inheritance, or as a savings fund set up by parents or grandparents in their lifetime) and Disabled Person’s Trusts, which have special tax benefits and rules. 

 

My information leaflet, Types of Trust – A brief overview, goes into more detail about types of trust and their popular uses. Please ask me for a free copy.

 

The use of Lifetime Trusts is becoming increasingly popular, as property values have increased dramatically, yet the individual person’s Nil Rate Band (NRB) has been set at £325,000 since the 2009/2010 tax year. 

 

The Residence Nil-Rate Band (RNRB) was introduced in the tax year 2017/2018 and is currently set at £175,000.  This tax relief can be applied if you leave a property to direct descendants in your Will.

 

Once your Trust is created, the assets are managed by the Trustee(s) for the benefit of the named Beneficiaries, and it is active from the moment it is established by signing the Trust Deed and transferring the Trust Property into it.

Many people choose to set up a Lifetime Trust to “ringfence” assets for various reasons, including protection from care fees, creditors, protection from ex-spouses of your beneficiaries after divorce, and to reduce your potential liability to Inheritance Tax. 

 

A Lifetime Trust can also be used to prevent estranged family members from contesting your Will,  to plan for incapacity of either yourself or a family member, to look after assets for people with disabilities or minor children until they reach a minimum age of 18 years old.

 

Most Lifetime Trusts are revocable, meaning they can be altered or cancelled by the Settlor during their lifetime. This flexibility allows for adjustments in response to changes in personal circumstances, financial situations, or estate planning goals.

 

Your Trust must be registered with HMRC within 90 days of its creation, and the Trust Property must also be legally transferred into the Trustees names. If it is a residential or business property, an application to HM Land Registry is required to change the Property Register.

 

I can deal with both of these procedural requirements for you once your Trust has been created, as I offer a complete service from start to finish.

 

Lifetime Trusts and Care Home Fees

 

One of the most common reasons people consider a Lifetime Trust is to protect their home from being included in local authority assessments for care home fees. However, there is a situation where the intended protection may fail:

If a local authority believes that you have transferred assets into a Trust specifically to avoid paying care home fees, they may treat this as 'deliberate deprivation of assets'.

In such cases, they have the right to assess you as if you still own those assets, which means the Trust may not give the protection you were hoping for.

Providing that you consider yourself to be fit and well when you are creating your Trust, with no indication that you will need to go into a local authority care facility in the near future, the risk of this ought to be minimal.

 

Severing your Joint Tenancy

 

If you or your spouse/partner own property in joint names, it will usually be held as Joint Tenants.

If you are a Joint Tenant, should one of you pass away, their share automatically passes to the surviving Joint Tenant. This is called the right of survivorship.

 

The Joint Tenancy can be severed to create what is called a Tenancy in Common.  Once the severance is made, the right of survivorship no longer applies, so then if one of you passes away, that share of the property does not automatically pass to the survivor. Instead, it passes by their Will or the rules of intestacy if there is no Will.

 

You need to serve a Notice of Severance on the other Joint Tenant, and this can be done with or without their consent. The signed Notice is then lodge at HM Land Registry together with a completed application form and the completed severance will appear on the title to your property as a Restriction.

 

This can also be reversed, changing from Tenants in Common to Joint Tenants – usually in the opposite scenario where you are now married and want equal rights for each of you to the property.

 

The point of this?

 

If you are Joint Tenants and either you, or your partner needs to go into a Local Authority care home, the whole value of your property will be used for their means assessment which will be carried out so that they can calculate how much financial support you are eligible for.

 

If you are Tenants in Common, only your half share of your property can be taken into account for the means assessment, rather than the whole value.

 

Also, if you are a sole surviving Joint Tenant and you go into care leaving the property vacant, your property can be used to fund your care fees, because you own the whole of it due to the right of survivorship.

 

However,  if you have previously severed the Joint Tenancy, as the surviving Tenant in Common you only own one half of the property. The other half was owned by your deceased spouse or partner who has left their half to someone else in their Will, usually children or grandchildren.

 

It follows that only half of the property is then available to service any future care fees, with the other half out of reach.

 

Please ask me for a free copy of my information leaflets - Care home fee information 2025 and Severing your Joint Tenancy

 

For a Severance to be effective in these circumstances, you must ensure that this is arrangement is reflected in your Will by having it amended or re-written, ensuring that you leave a right of occupation of the property for the surviving owner.

 

If you don’t have a Will, you will need to make one, otherwise the other half of the property will pass straight back to you as the surviving Tenant in Common by the Intestacy Rules, leaving the severance ineffective in terms of care fees.

 

Please contact me to receive some initial free advice to see whether I can help you, with no obligation or pressure to proceed.