Protecting against care home costs and loss of assets

[MWalker]

Hi,
I'm sure this is not a new subject, though couldn't find a thread.

I have been reading up loads on the subject of care homes and costs and am looking to approach a solicitor or financial advisor but wanted to get more of a clearer idea on the subject, especially in respect of any tax tips on the subject.

My mother owns her own home after my father passed away 20 years ago, she now decided she wants to move into a residential care home, (although she is relatively young for this, only 68 - but it is more for mobility restrictions, following a stroke and other health conditions).

Her property is worth about 170K and she has about 200K in building society savings, this was following my fathers death and various life insurances, plus shares etc. and my mother has kept this money aside always for her children (myself and 2 brothers), while she lived throughout these years on a modest income of a widowers pension (and disability allowance in the past few years)

She is currently in hospital and does not want to return home, so is looking to move into residential care now, but she doesn't understand the whole system and seems to think that because she has left the house and money to us children in her will, that this will be the case. I am organising for a financial advisor to meet with her but am wondering if this is worth it given the bleak picture I have found from reading up on this...I have a few questions!

Are there any ways to protect my mothers estate bearing in mind the deliberate disposal of assets legislation? - any tax saving ways to work this situation without her losing what she had put aside?

Can she amend her will to one called a property protection one I was reading about? - or is this too late given that she is now ready to move into care?

Or can she invest in anything? Both my brothers and myself are all still renting, if she spent money on helping us get on the property ladder in respect of deposits for a mortgage, would this be deemed as deliberate disposal, bearing in mind none of us are home owners? and do not have disposal incomes that have allowed us the financial assistance to accomplish this yet (we are all in our 30's)

Is she able to give a proportion to us at all - without her being penalised?

Also, in regard to her home, I was reading that local authorities cannot sell the property to pay for costs if in the property there is living someone over 60, or a child under 5? My brother has a young baby, if he lived there would this prevent this?

Also, I have a limited company, could this be used in any way?

Are there any trusts she could use in relieving the situation?

Or perhaps could she transfer the money to us through whatever means via the best tax methods and then rent her home out for seven years and suffer the amount on top she would have to pay, but after the seven years, be eligible for local authority assistance?

- Sorry for so many questions! but I am sure there are many a person who may feel the same as I do that the system does penalise those who have worked all their life against those who have deplected the system and then get all the care free of charge. And I am upset as I dont think my mother realises the harsh reality of the current circumstance regarding care.

thanks!

[bob.fraser@towrylaw.]

First of all please make sure that whoever advises your mother on her long term care planning holds the CF8 qualification from the Chartered Insurance Institute. It is a regulatory requirement from the Financial Services Authority that those advising individuals on long term care issues must be formally qualified in that area.

You are correct that taking action to "intentionally deprive" yourself of assets to avoid long term care can be challenged, especially if done within 6 months of moving into care.
However, taking action to avoid inheritance tax would be a prudent tax reduction measure and is normally a defence against such a challenge.
I note that your mother is £85,000 in excess of the nil rate band, so that, at least, could be considered for financial planning.

The most important person in all this is your mother. As you say, she is still quite young and so her financial security is paramount. Any financial planning would need to take her requirements into account.

I would suggest that you let the adviser you have found speak to her, and then if you wish you could put his proposals in this forum for our comment.

Bob Fraser
Chartered Financial Planner