Planning For Later Life
Many people are concerned that their assets will be diminished if they move in to a care home or nursing home in the future. According to Paying for Care*, the average cost of a care home is £29,250 per year, and if nursing care is required, the average cost is £39,300 per year. In recent years, there has been much media coverage advising people to give away their assets in order to protect against these fees.
But what are the implications of giving away your assets? And what are the tax consequences of doing so? Here are a few frequently asked questions that we, at Everys, get asked, and some information about the types of things you can do to protect your assets.
What assets are taken into account when the local authority assesses your ability to pay your own fees?
If you have capital over £23,250, you will be assessed as being able to meet the full cost of your care whilst in a home. Your capital includes things like the value of your home and the money that you have in your bank account(s).
What assets are disregarded for the assessment?
Your personal belongings, which can include your car, is generally disregarded, along with most types of income, for example your pension.
Can I give away my home to my children in order to avoid paying nursing home/care fees?
You can give away your home to whomever you like but there are some potential pitfalls of doing this. If you gift your property away then you no longer have control over it. This means that the new owners can sell the house whenever they wish and release equity from it without your consent. There can also be capital gains consequences when the new owner comes to sell the house if it is not their main home.
If you give your home away and continue to live in it, the value of the house will also be included in your estate for Inheritance Tax purposes – even though you no longer own it. You may also fall foul of the ‘deliberate deprivation’ of asset rules.
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