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Trying to avoid care home fees? Think twice, consumers told

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A report on the BBC news website warns homeowners trying to avoid care home fees by transferring ownership of assets to think twice.


As our recent blog highlights, research published by insurers Royal London revealed that average weekly costs in England and Wales vary between £500 and £710 – depending on the particular region in which you live.

And while there is financial help from local authorities, it is strictly means-tested and also subject to where you live (with different areas having different criteria).

Typically, you may only qualify for state help if your home, savings and investments are together worth less than £23,250.

If you are worth more than that, you have to pay the full cost of your care - during your lifetime and, if necessary, from your estate after you have died.

The BBC cited a product which works by transferring the ownership of assets like a home or savings into what it calls a "Wealth Preservation Trust", meaning that with a trust owning the assets, those assets will no longer be counted in the means test. That should make it more likely that the individual will qualify for local authority help.

There is, however, a catch.

According to the National Association of Financial Assessment Officers (NAFAO), if avoiding care fees is a substantial motive for putting assets into a trust, then a local authority can challenge it as "deliberate deprivation".

Bridgette Shilton, from NAFAO says: "If people are trying to protect their house in the avoidance of care fees then that's not allowed; that is a clear deprivation of assets. It doesn't work, as soon as we find out a property has been transferred we will be looking into the motivation, we will be asking questions."

“However” counters Mary Butler, from solicitors Bell Buxton, “If trusts are genuinely set up for reasons other than avoiding care fees, they may succeed in avoiding care fees as well.

"I'm not saying that these products would not in certain circumstances work, if you were seeking to part with ownership of a property when you're fit and healthy, when there's no prospect whatever that you're going to go into a home."

Read our free Guide to Putting a Property in Trust here.