Rosie Murray-West writing in the Telegraph reports that homeowners are being warned to be careful before signing up to any scheme that claims to protect their home from being sold if they need to go into care.
She writes that if their assets are above a pre-set cap, they will be liable to pay for the cost of care themselves.
The cap is quite low – just over £23,000 for this tax year – meaning that most property owners will be liable to pay for care, even if it means having to sell or rent out their property to raise the funds.
An asset protection trust claims to put a person’s home in a trust for someone else. Fees to set up these trusts can run into thousands of pounds.
But Janet Davies, from the care fees planning service Symponia, says local authorities are increasingly employing ‘avoidance officers’ to ensure that residents are not using these trusts to wriggle out of care fees.
Source: The Daily Telegraph
We say: Oooh….we love a bit of scaremongering about the future. With life expectancies on the up, the flipside is: you’re now much more likely to need some form of long-term care in your dotage. But of course, no one wants to finance long-term care using their own bricks & mortar, when there’s a generation to pass it on to.
So while we can see how these “save your home” schemes can sound quite attractive, the simple truth of the matter is: if you don’t pay for your care, someone else has to. So it’s not surprising that the Avoidance Officers are being set loose on this particular issue.
And aside from the moral issues, with our happy-go-lucky-tax-geek hat on, it’s quite clear that lifetime trust schemes are fraught with some seriously taxing issues:
- Inheritance Tax kicks in by creating immediately chargeable transfers and gifts with reservation of benefit,·
- It creates problems with Capital Gains Tax;
- and HM Government can even claim your entire structure is a “sham” argument to deliberately deprive you of assets when your care home assessment form needs completing…
So, the upshot is: don’t do it, kids.
But there ARE things you can do. For example – married couples can sensibly, and completely above board, set up a simply designed ownership structure for property, and create a trust under the will of the first spouse to die.
Oh and lots of other things….you don’t have to take risks to be clever….
