‘Can I put my house into trust so the council pays my care fees?’

Clearly this is an evidence-based test of what was reasonably foreseeable at the time the gift was made, as well as what the motivations were.

In practice this means any person gifting their home into trust should record a contemporaneous reason why they are doing it which is rational, believable and not connected to avoidance of care home fees. You say you are in “good health” which is great news generally, but also very helpful if you want to give away your house because if you were already in poor health the local authority would have a stronger argument your actions were a deliberate deprivation of assets.

It is a common misunderstanding that after a certain time, gifts of houses in trust become “safe”. Seven years is sometimes quoted by clients to me. The seven-year rule is relevant to gifts falling out of an estate for inheritance tax purposes, but not in the context of care home fees. In fact, there is no time limit for a local authority to go back and query historic transactions.

One gift that may never be challenged by a local authority is a gift in a will. For a couple who own a house in their joint names, making wills leaving one half of the house in trust on the first death for use by the survivor and then onto to chosen beneficiaries, is totally bomb-proof so far as the deliberate deprivation of assets rules are concerned. 

This is because the person making the gift (in their will) has died by the time the gift is put into effect and if you have died you do not need care. The surviving spouse may need care, but in that case at least half the house will be protected by the trust created in the will of the first to die. Please also note that whilst both are still alive and one half of the couple needs care, the family house is disregarded in any financial assessment whilst the other is still living in it. 

The “will trust” strategy I have outlined serves to protect at least half the house, as long as there is a couple and both do not go into care while they are both still alive.

One final thought though is be careful in effect short changing yourself when it comes to future care. Personally, I would want to have the best care available and frankly that means being a “self-funder” rather than relying on the local authority to pick up a shortfall. So maybe you should keep the house and just make new wills.

Ask a Lawyer is written by Gary Rycroft, solicitor at Joseph A Jones & Co, and published twice a month on Mondays. Email your questions to askalawyer@telegraph.co.uk

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