You may want to ensure that you loved ones can inherit your home when you pass away, so they have the cash they need to bankroll bright futures. It is common knowledge that a property can be used to fund the cost of care, preventing you from passing it onto your loved ones. If you have ever wondered “how do I place my house in a trust to avoid care home fees” keep reading to learn the answer.
What is a trust?
A trust is a legal vehicle which is used to hold and manage assets, such as property. As the ‘settlor,’ you place the assets into the trust, for your ‘trustees’ to manage and there is nothing stopping you from holding both positions. Once you place assets into a trust you no longer legally own them, the trustee does, meaning that you can potentially utilise trusts to shield your home from care costs.
Setting up a trust involves drawing up a document called a ‘trust deed.’ You can use this two appoint one or more trustees and any beneficiaries you wish to benefit from the assets held in the trust, as well as outline any administrative guidelines for how the trust should be managed. It is key, however, that you set up the right kind of trust, if you wish to use one to protect your home from care costs.
There are two types of trust which prove effective, when it comes to safeguarding your home from care costs, and the first is the pilot trust. This is a lifetime discretionary trust, which you set up in tandem with your will. Pilot trusts, which you can open as an individual or with your partner, are very flexible estate management tools, and can be used to remove your home from care cost calculations.
You can reap various other benefits with pilot trusts. You can open a pilot trust with only minimal capital and they also safeguard your assets from life events such as bankruptcy and divorce. You can also put property into a pilot trust, whether it is mortgaged or not, and it will remain in your possession throughout your lifetime, so you can use a pilot trust to ensure both your and your loved ones benefit.
Protective property trusts
The second type of trust is the protective property trust. Similarly to a pilot trust, this vehicle activates when your will comes into force, but prevents your home from being included in cost of care calculations differently. If you place your home into a protective property trust, you will appoint someone to be the property’s life-tenant, so they have the right to live in it for the rest of their life.
By appointing a life-tenant for your home, you will change the ownership of the property from ‘joint tenants’ to ‘tenants in common.’ You will each own half of the property, so should you pass away and they need to go into care, your half of the home will not be used to bankroll this. You can set up a protective property trust with your spouse, so you both own half the house, but also insert a clause to stipulate that if they re-marry this life interest ends, to shield your children’s inheritance.
Prestige Tax and Trust Services
It is possible to place your house into a trust to avoid care home fees. It is advisable that you enlist expert aid, as UK trust law is complex, and it takes experts to utilise these vehicles effectively. We would be happy to help at Prestige Tax and Trust Services, as we are experts in cost of care matters, so please feel free to get in touch so we can ensure you can pass your home onto your loved ones.