Can I transfer my home to my children to avoid it being sold to pay my care fees?
For the majority of people, the family home is their most expensive asset and many people are concerned that should they ever require residential care, they may be forced to sell their home in order to pay their care fees.
Due to our ageing population and the rising costs of care homes, many clients consider transferring their home to their children or other close relatives in order to ‘ring fence’ the capital tied up in their property.
However, although this may seem like a logical solution to ensuring that the family home is not sold to pay for care fees, it quite often does not work in practise. This is because when the local authority assesses your finances in order to determine whether you qualify for financial assistance with care fees, they can also look for evidence of deprivation of assets, such as property and savings.
What is deprivation of assets?
Deprivation of assets is when a person intentionally decreases their overall assets in order to reduce the amount that they need to contribute towards their care fees. If the local authority arranges your care, they will assess your finances to determine whether you are eligible for any local authority financial assistance. When assessing your finances, they will have regard to any savings, property, income and other capital. If the local authority find that a deprivation of assets has occurred, they may still include the deprived asset within your financial assessment.
If you are found to have deliberately deprived yourself of assets, the local authority have the discretion to decide whether or not to arrange your care. In addition, the local authority can also seek to recover the funding for your care from the third party whom you have transferred the asset to. The third party can then be liable to pay the local authority the difference between what you would have been charged and what you were charged at the time of the assessment.
Lastly, the local authority can start County Court proceedings to recover any debts owed to them if you have been found to have deliberately deprived yourself of assets in order to avoid paying for your care fees.
Additional risks of assets transfers
Aside from the financial assessment, transferring your assets can also cause further consequences. The most obvious risk is that if you transfer an asset to a third party, the asset is no longer yours and you no longer have control over it. It is not always possible to rely on the third party to manage your assets in accordance with your wishes, even if they are your close relatives such as your children. Disagreements may arise in the future which you must take into consideration if you decide to transfer any assets.
For advice on this issue please contact our Private Client team on 01295 661556 to make an appointment to speak to one of our lawyers.