Nearly 400,000 people in the UK are resident in care homes, and according to research conducted by the Office of National Statistics (ONS) 36% of those are ‘self-funders’. This means they are responsible for their own care fees and receive no help with the cost from their local council.
For many people their main asset is their family home. Understandably this leaves many people concerned about what would happen to their home if they were to require long term residential care. In this article we’ll break down what the reasons for concern are and how we can help you to plan appropriately to put your mind at rest.
What does it mean to be a ‘self-funder’?
When entering residential care the local council must carry out a financial assessment or means test to decide whether you are eligible for help with the cost of your care. Under the current rules if you have capital, that’s things like property and savings, worth over £23,250 then you must pay your full care fees. You’re a self-funder.
You may have heard of this threshold rising to £100,000 and a ‘care cap’ being introduced later this year but unfortunately this has been delayed to October 2025.
If you have capital below £23,250 then the local council will help towards the cost of your care, though you may be expected to contribute from your income. Essentially the more you have the more you need to contribute.
If you own your own home then this will be included within the means test unless it will still be occupied by your spouse or partner as their main residence. It is also disregarded if occupied by a child of yours who is under 18, or a relative who is over 60 or incapacitated. If the spouse stops living in the property as their main home then it will fall into your means test from that point. This means that if you were to enter care and your spouse were to die leaving their share of the property to you that the whole property could be at risk.
How can a Will help?
With careful Will planning it is possible to help mitigate the risk to the property described above. Including a Property Protection Trust (PPT) in both yours and your spouse’s Wills can protect at least the first person to die’s share of the property. This will ensure that your children eventually receive at least a share of the property even if your spouse required care after your death.
For a PPT to work you and your spouse need to hold your property as tenants in common. Most people hold their property as joint tenants. This means that on first death the property will automatically pass to the surviving owner no matter what the will says. Changing to tenants in common will make sure that the trust we include in your will to protect your property will take effect. It’s a simple process with the Land Registry that will guide you through.
The PPT is a Will based trust so your property isn’t transferred to trust now – you still retain ownership of it. When the first of you passes away the PPT will come into effect and protect that person’s share of the property. This will mean that if the survivor does require care in future they can only be assessed on the share of the property that they own. The other half is ringfenced by the PPT ensuring that eventually it, or the money representing it, will pass down to your children.
Where does this leave the survivor? The survivor is given a right to occupy the property by the PPT so they can continue to enjoy the property uninterrupted. The children are known as remainder beneficiaries so they will only actually become entitled to the property once the trust ends, usually on the second person’s death. We can also discuss including powers to sell the property and purchase a new one in the trust, allowing the survivor freedom to move if required.
There are plenty more reasons that a will can benefit you. To discuss your own personal requirements in more detail please get in touch.