When looking at Long Term Care or any Later Life financial planning, how your property is owned could have an impact on any Local Authority support you may receive and importantly, could protect some of the value of your house going forward. When owning a property with another person it is generally held under either a ‘Joint Tenancy’ or ‘Tenants In Common’ basis.
When a property is held under a ‘Joint Tenancy’ agreement, upon the death of one of the owners the property is automatically transferred in to the surviving owner’s name. This means they now own it 100%.
Under a ‘Tenants In Common’ agreement, upon death the deceased owner’s share passes to their beneficiary/ies. Whilst this can result in complications for the surviving owner as they may now only own part of the property, it can have benefits when looking at Long Term Care funding. This is explained in the following example.
Bob and Susan are married and own their property under a Joint Tenancy agreement. Bob requires care in a care home but as Susan continues to live in the property, the property is disregarded under the Financial Assessment. This means Bob’s care is funded by the Local Authority (it is assumed he does not have any other assets).
Susan then passes away, this means that Bob now owns 100% of the property. As a result of this and due to Bob not living in the house, the value forms part of the Financial Assessment. This in turn makes Bob a ‘self-funder’, the property would likely be sold and the value used to fund the care Bob needs. This could result in virtually all of the value being eroded away.
If Bob and Susan were to own their property under a Tenants In Common agreement the situation would be different. Initially there is no change, the property would continue to be disregarded for the Financial Assessment whilst Susan lives in the property and Bob resides in a care home. However, upon Susan’s death she is able to leave her share to another beneficiary. Whilst this may mean that Bob will still need to self fund, the share that has been passed to Susan’s beneficiary has been protected and therefore will not be eroded to pay care home fees.
In summary, it is possible how your house is owned could impact on any future support you may receive from your Local Authority. However, care must be taken not to ‘deliberately deprive’ yourself of these assets as it may mean they are taken in to account anyway. Whilst this may not be at the fore front of your mind, careful consideration should be given as to how your assets are structured.
This area is just one of many considerations when looking at Later Life and Long Term Care planning. At Wingate, using our expertise we are able to provide advice and guidance when looking at how to plan your future. This also includes providing any advice should the need for care funding be immediate.