DISABLED MOTHER AND PROPERTY TRUST

by **doji** on Fri Mar 11, 2011 10:12 pm

My mother is approaching 90 years and disabled with atheritis. She owns and lives her vown home with help from carers. She has recently mentioned that maybe she should be considering going into a care home. Her property is in a sought after area and would be capable of providing enough income from rental to fund a large amount of carehome fees. She has an isa with about £2000 and about £1500 in a current account. I have full power of attorney for both property and wealfare. Is it a good idea to place the property into a trust and which type. Would any income from letting the property be taxed if so can this be minimised. Or would this move be deemed avoidance by local authority

by **AvocadoK** on Sat Mar 12, 2011 8:15 pm

It's worthwhile reading the CRAG guidelines that the local authority follow (google for CRAG guidelines and you will find it). Where gifts are made within 6 months of going into care, the LA will assess the donee. Where a longer period has elapsed, they will consider whether the gift was deliberately made to avoid paying care fees and if so, assess the donee for the care fees.

Trusts are taxed at 50% on all but the first £1,000 of income. She could consider a gift to her children outright. It won't save on the care fees, but it will get it out of her estate for IHT purposes if she survives 7 years. It might seem a bit late for this, but it is understood that the queen mother made gifts in her early 90s and did survive the 7 years. She would need professional advice before making gifts like this. I don't think you can use a power of attorney to make gifts on her behalf, but a solicitor will be able to advise definitively.

AK

by **doji** on Sat Mar 12, 2011 8:33 pm

Thanks so much for your advice, I realise that when things get this late it becomes more diffult to plan effectively - unfortunately my parents were very much of the old school so proper planning was never an easy option. Thanks again and any further thoughts would be very greatly appreciated

by **Lee Young** on Sun Mar 13, 2011 9:33 pm

At this late stage IMHO it is too late to consider putting the property in trust to try and enhance your mother's rights to have funding from the local authority for her care fees.

In any event, as attorney you would have to seek the consent of the Court of Protection to such a gift and this would not be quick, straightforward, inexpensive, or probably likely to be forthcoming.