Without appropriate measures in place, the value of your estate may be consumed by future care fees. However, with a well-crafted will, you can safeguard your assets against such charges.
Tackling this requires insights from an expert specialising in will writing.
Could Your Residence Be At Risk Due to Care Charges?
Future care home fees might diminish the inheritance you’re hoping to pass onto others. Proper preparation can allow couples to preserve a portion of their wealth from such expenses. This demands meticulous planning and guidance from a will writing specialist.
Without such foresight, couples could see their wealth significantly eroded by care costs.
Consider this scenario:
Mr and Mrs Johnson, in their early sixties, had two grown children. Their combined assets stood at around £260,000, primarily consisting of their £250,000 residence and savings of £10,000. To be proactive, they drafted standard mirror wills. The arrangement was simple: when one passed away, their assets would transfer to the surviving spouse, and eventually, their children would inherit the estate in equal parts.
A few years down the line, Mr Johnson sadly passed away, leaving his assets to Mrs Johnson as per his will. Mrs Johnson lived independently for several more years. Unfortunately, she later needed residential care.
Upon financial evaluation by the local council, Mrs Johnson’s assets were valued at £260,000. Given that this was above the £23,250 threshold, she was required to foot her residential care bills entirely. With annual care costs at £31,000, the sale of the family home became necessary. Mrs Johnson stayed in the care home for six years, accruing £186,000 in fees (6 years x £31,000). Upon her passing, her estate, now valued at £74,000, was left to her children.
Shielding Your Residence from Care Home Expenses
This scenario isn’t uncommon. Many wonder if a will can ensure that their children benefit from their assets, rather than having them drained by care home fees.
The encouraging news is that specific trust structures in your will can indeed protect a portion of your assets.
Leveraging a Trust to Safeguard Your Estate from Care Fees
Trusts can be structured so that after one’s passing, the surviving partner can benefit from the deceased’s assets without having legal ownership. This means when assessing assets for care fees, trust-held assets aren’t included in the surviving partner’s estate.
A will writing expert can best advise you on your options. If you’re a homeowner, understanding your property’s ownership type is vital. Properties can be jointly owned either as joint tenants or as tenants in common. This distinction can significantly impact your will’s protective capabilities.
In a joint tenancy, the property’s legal ownership automatically transfers to the surviving owner upon death and doesn’t follow the will’s stipulations.
Owning a property as tenants in common means each person has a specific property share, which is distributed as per the will’s terms.
Trust Mechanism
Suppose Mr and Mrs Johnson held their property as tenants in common, each with a 50% stake. They could then employ trust wills to safeguard their respective shares. With expert guidance, Mr Johnson could’ve allocated his 50% of the family home to a trust, while Mrs Johnson retained her living rights.
Mr Johnson’s share would equate to £125,000. When Mrs Johnson’s assets were assessed for care charges, the £125,000 in the trust wouldn’t be considered. This would place Mrs Johnson’s assets at £135,000. Over subsequent years, Mrs Johnson’s assets are diminished by care costs, leaving only £23,250. At this point, she qualifies for assistance with her care charges.
On her passing, Mrs Johnson’s remaining £23,250 combined with Mr Johnson’s £125,000 trust amount means their children inherit £148,250. This is considerably more than they’d have received without the trust’s protection.
Seek Trust Will Guidance
For trust wills to serve their purpose, it’s crucial to consult a will writing specialist. If unsure about your property’s ownership type (whether joint tenants or tenants in common), our trust will writing service can determine it for you.
