Clients often ask about giving away their property to avoid care fees in the future and whilst there is nothing to stop you gifting your property, it is often inadvisable.

Many people worry that if they need care their hard-earned assets will be used to pay the fees, and the most common asset that people are concerned about is their home. This is usually the most valuable thing a client owns and they would prefer to pass that down to the next generation rather than see it sold and the funds used to pay nursing or residential care fees. However, if you give away your most valuable asset, that can leave you short of money in the future.

In addition, the council can consider any such gift to be a deliberate deprivation of assets to avoid care fees. If you are not able to pay your care fees, the council can refuse to pay for the standard of care you would prefer, give you no choice as to where you live, or even legally overturn the gift so as to force your children to return the property so that the costs of care can be recovered.

Even without the risk of the council considering the gift to be a deliberate deprivation, the gifting of such a valuable asset is often unwise. If you give your property to your children you could risk being forced to move out if there was a disagreement, if your children became bankrupt or if they were to go through a divorce or separation. There is no protection for you if the asset no longer belongs to you.

A gift into a trust can sometimes be appropriate so as to offer you the protection whilst you live in the property, but the council frequently considers these arrangements to be suspicious and a deliberate deprivation.

If you do wish to make some sort of gift, the timing of the transfer can be tricky. The closer the gift to you needing care, the more likely the council is to look into the arrangements more thoroughly and there is no specific time that must pass before the gift is “safe” – the seven year rule often mentioned is misleading as it is a rule that applies only to Inheritance Tax.

The government have now scrapped the proposed cap on care fees that was due to come into effect in 2023 and, notably, that cap was only to be placed on the personal care element of care fees and not accommodation or more complex nursing care costs which were not to be limited in that way.

Planning for future care costs is a complex issue that requires careful consideration. While gifting your property may seem like a straightforward solution, it can have significant financial and legal consequences. It is essential to explore all available options including planning though your Wills, equity release mortgages and care annuities, and seek professional advice to ensure your assets are protected while securing the care you may need in the future.

How we can help

If you are concerned about care fees and want to explore alternative solutions, our expert team is here to help. Contact us today to discuss your circumstances and find the best approach for your situation.