If you live in your home as a couple and your partner still lives there when you go into care, the value of your home is disregarded.  Your home is therefore safe from care fees as long as your partner continues to live there. 

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Why should you therefore need to do anything to protect your home if you are a couple? 

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The answer lies in the wording “if your partner still lives”. 

 

But what if your partner dies?  Now your home is fully exposed.  Also, what happens when you eventually pass away?  If you owned your home jointly, now your partner solely owns the home and it is exposed if he or she needs care. 

 

You should therefore take action now to protect your home. 

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The action you are going to take is also an action you should take anyway to improve your Inheritance Tax position as well as to protect your home from the many threats to which it is exposed when you pass it on to your children and grandchildren.  There is therefore a good solid reason for doing this which is nothing to do with wanting to avoid having to pay care fees. 

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The Strategy 

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There are three steps to the right strategy for a couple to protect their home from care fees. 

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1 - Check How You Own Your Home 

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The first step is to check exactly how you own your home with your partner.  Do you own it as “Joint Tenants” or as “Tenants in Common”? 

“Joint Tenants” means that you each effectively own the whole of the property.  When one of you dies, the property automatically becomes an asset of the survivor, no matter what your Will may say, as he or she owned 100% of it, not just half of it.  When you first hear this concept it sounds crazy.  How can both you and your partner each own 100% of something?  It is probably best not even to begin trying to understand the logic of this. 

“Tenants in Common” means that you each own just part of the property.  This is usually half each.  When one of you dies, the property does not automatically become an asset of the survivor, as it is up to you to say in your Will what you want to happen to your share.  If you own half each you might give your half to your son when you die, and then your partner will own half and your son will own half. 

Unless you have deliberately set up the ownership of your property as “Tenants in Common” it is very likely that you own it a “Joint Tenants”.  You do not want this to be the case, as it exposes the property to care fee costs if one of you goes into care and the other dies. 

You can check this by checking online at the Land Registry and downloading the details of your home.  If you need help interpreting the document, or even simply want someone else to do the work for you, we can do this for a small fee. 

 

2 – Change the Ownership of Your Home 

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If you find you own your home as Tenants in Common you can go straight to Step 3. 

If you own your home as Joint Tenants, change the ownership to Tenants in Common.  This you do by sending a form to the Land Registry.  Again, if you need help doing this or want someone else to do the work for you, we can do this for a small fee. 

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3 – Change Your Wills 

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Now that you own one part of your home and your partner owns the other part, you each need to ensure your Will disposes of your part of your home in the right way. 

The right way is for your part of your home to go into Trust on your death, with your partner as one of the beneficiaries, along with whoever you wish to benefit when you have both passed away (presumably your children).  This is a strategy we have used again and again and know exactly how best to set it up to achieve this and other objectives. 

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The Reasons 

 

When you pass away, your partner still benefits from the whole of your home.  They own their own half, and are now a beneficiary in Trust of your half.  So they are not losing any benefits. 

There are many benefits from doing this, including an Inheritance Tax benefit.  But included in these benefits is that now your home cannot be attacked by the Local Authority if one of you goes into care, even if one of you dies before or while the other is in care. 

The person in care owns half the house, but the other half of the house is owned by a Trust, the beneficiaries of which have the right to live in the house.  The Local Authority would theoretically assess the value of the half of the house which the person in care owns.  But by law they have to use the market value.  What is the market value of half of a house where the owner of the other half can come and live there?  The answer is, of course, zero, as nobody would want to buy half a house in those circumstances! 

The “Care and Support Statutory Guidance” is the legal framework which Local Authorities must follow when deciding what to take into account where someone requires financial support for their Care.  Annexe B, Section 15 of the Guidance specifically states that “The Current market value will be the price a willing buyer would pay to a willing seller”.  There is also clear precedent in Chief Adjudicating Officer v Palfrey that the market value of half of a house is zero where the other owner can occupy the house and has no intention of selling their share. 

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Legally, therefore, the Local Authority must assess as zero the value of the half of the house still owned by the partner in care.