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Over the years, the number of people ending up in residential care homes in Scotland has increased and it is now more prudent than ever to plan in advance how one shall cover the cost of care, should they ever find themselves in this position.

Although no-one likes thinking about the possibility of living in residential care, here at The McKinstry Company we advise our clients to have in place the appropriate planning to not only provide themselves with peace of mind that the appropriate steps have been taken provide some protection of their assets, but also to ensure family members, and loved ones, have one less thing to worry about in the future should this situation ever arise.

As life changes and residential care then becomes necessary, the local authority for the area in which the care home is situated will carry out what is called a ‘financial assessment’ on the adult who requires care. This assessment will take into account the value of all of your assets to determine which care home you would be able to afford and whether you would be classed as ‘self-funding’. If you are classed as self-funding you would be required to meet the care home costs yourself, which can range from anywhere between £1,000 to £2,000 per week, depending on the type of care required.

Normally, the most valuable asset someone holds is their property, i.e. family home. It was common for those considering care home planning to transfer their share of their property to a family member to reduce the combined value of their assets and to protect the family home from being sold in the future to meet care home costs. However, it is important to note that care home planning is not as easy as this. This will be viewed by the local authority as a ‘deprivation of assets’ and when carrying out their financial assessment, the value of the asset you had transferred, will be included within your list of combined assets.

An alternative step that could be taken to provide some protection to your family home is by assessing the way in which the title to your family home is currently held. It is common for the title for couples to be held ‘jointly and to the survivor of them’. This means that the property automatically passes to the joint survivor on the passing of the first joint holder.

Here at The McKinstry Company, an option that can be explored is amending the title to the property to show the Title as being held ‘equally between’ the parties. This means that the value of your property is divided equally between both joint holders, and on the death of one of the joint holders, the value of their share does not then form part of the surviving joint holder’s assets. This step allows some protection of your assets without questioning, and this advice applies to all assets held jointly or on last survivor basis, i.e. bank accounts, policies etc.

Another effective step toward protecting your assets is by having a Will. The possibility of putting in place a discretionary trust in your Will or a liferent trust of the residue of your estate, which includes the family home, may be beneficial as you still own the property in question which means it does not raise concern in relation to deprivation of assets, rather it is held in trust which means the assets in trust are classed as being out with your estate. If you already have a Will in place, it may be relevant to revisit your Will to ensure its terms accurately reflect your wishes and addresses your care home needs.

Ultimately there are no steps that can be taken that guarantee all of your assets will be safeguarded from care home costs however the steps discussed above are some of the effective ways of putting in place some protection over your assets.

Every circumstance is different and care home planning requires careful deliberation to achieve the best results in the situation at hand, and to ensure steps taken during lifetime do not have an adverse effect on your Inheritance Tax planning or give rise to Capital Gains Tax. At The McKinstry Company, we are able to provide you with further advice and assistance tailored to your assets and needs. Should you wish to proceed and put in place care home planning today, call our Ayr office on 01292 281711 or our Girvan office on 01465 713118 to speak with an experienced member of our team who shall be able to assist.

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