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Will care costs wipe our assets?
PL, Bucks: Having transferred our house to a 'tenants-in-common' ownership some time ago, it now occurs to me, as I am approaching old age and possible infirmity, that we could have made a serious mistake.
If, as time goes on, I find myself in the situation of requiring full-time residential care, my wife would probably wish to move to a smaller property. In view of the current housing market, it is unlikely she would be able to buy anything at around 50% of our current house value.
As we may have received assistance with my accommodation from our local authority, we would surely be required to repay some of this using my assets (50% of the house), thus preventing my wife from purchasing a smaller property.
Is there any way in which the liability to repay my accommodation costs can be rolled over until after the sale of this second and smaller house - that is, upon her death?
Matt Pitcher, IFA at Towry Law, Bracknell: There is a possibility that if funds were raised from the downsizing of your property, the local authority would expect to receive some of your share of the released cash. It is unlikely that they would request the full value of your half of the property as your wife would need the funds to reinvest in the new, albeit cheaper, house.
Although there are horror stories about local authority care funding, most authorities will take a practical approach and work with the family. If you are seriously concerned about this then you should seek legal advice from a suitably qualified solicitor.
It may simply boil down to a question of finding the lesser of two evils - do you try to save on inheritance tax or do you remove any doubt over long-term care funding?
There was a recent case where HM Revenue & Customs challenged the use of tenants-in-common and a will trust successfully. The basis of their claim was that the wife in the partnership could not own 50% of the property as she had not contributed this amount financially. We are all watching to see how this develops - and it may be sensible for you to do the same.
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