Can I transfer my property to my children to avoid care fees?

As we grow older, long-term care costs can become a substantial financial concern for many families. Some individuals may think about transferring their property to their children in an effort to sidestep paying care fees. However, this tactic can have unintended consequences, as it may be regarded as a deliberate deprivation of assets. In this article, we'll delve into the law surrounding this matter and the legitimate solutions offered by April King.

Purposeful Deprivation of Assets

Transferring your property to your children with the aim of evading care fees can be viewed as a deliberate deprivation of assets. This implies that you are purposefully reducing your wealth to avoid paying for care services. Local Authorities possess the power to evaluate your finances when determining your eligibility for care funding. If they discover that you have intentionally deprived yourself of assets, they can take action to reverse the transfer and reclaim the value of the property for care fees.

No Time Restriction and the 7-Year Myth

A common misconception is that there is a 7-year time limit on the Local Authority's ability to reverse the transfer of property. This is not accurate. The 7-year rule is actually applicable to inheritance tax and has no connection with care fees. In truth, there is no time limit on how far back a Local Authority can investigate and potentially undo a transfer of assets.

Financial and Relationship Troubles

Adding to the risks of transferring your property to your children, doing so also makes your primary asset more vulnerable as you relinquish control over it. If your child subsequently encounters financial or relationship difficulties, your home could be exposed to claims by their creditors or in a divorce settlement. This situation could result in a stranger ultimately owning your home, leaving you and your family in an even more precarious position. In addition, transferring your house to your children may lead to unexpected tax liabilities for them in the future.

A Legitimate Solution for Couples

April King provides a legitimate solution for couples who want to safeguard their assets without resorting to deliberate deprivation. By crafting a bespoke April Will?, you can ensure that your property is passed down to your children and grandchildren while still providing for your spouse or partner. This arrangement can assist in shielding the family home from being used to pay care fees in the future.

An April Will? enables you to divide your property into two shares, which can be owned separately by you and your spouse or partner. Upon the first partner's passing, their share of the property is transferred to a trust. The surviving partner can continue residing in the property for the remainder of their life (or even move house if they wish to), while the trust ensures that the deceased's share is protected for their beneficiaries, typically their children and then their grandchildren.?

Distinguishing Legitimate Solutions from Asset Protection Trusts

It is important to emphasise that our legitimate solution should not be confused with an 'Asset Protection Trust', which could potentially be classed as deprivation. We do not endorse or offer Asset Protection Trusts for this reason. The primary difference between our trusts and Asset Protection Trusts is that our trusts are testamentary, meaning they are established upon death. By setting up the trust in this manner, you are not depriving yourself of an asset during your lifetime. This distinction ensures that our trusts provide a reliable and legally sound approach to safeguarding your property for your loved ones without running the risk of being accused of deliberate deprivation of assets.

Conclusion

Transferring your property to your children as an attempt to dodge care fees is a risky strategy with potentially serious consequences. Instead of deliberately depriving yourself of assets, think about creating a comprehensive Will from April King Legal. This legitimate solution allows you to protect your share of the property for your children whilst providing for your spouse or partner. For further information on our specialist and bespoke Wills and other estate planning services, visit our website at?aprilking.co.uk. We also have a free guide which we post to those who are interested in our services. To order yours, visit our website or call 0800 788 0408.?