The cost of care home fees can be a significant financial burden for many people, especially as they age and require more support. One way to avoid these fees is to put your house into a trust. But what is a trust and how does it work? And why is there such a lack of knowledge surrounding this topic?
What is a Trust
A trust is a legal arrangement where property or assets are transferred to a third party, known as a trustee, to hold and manage on behalf of the beneficiary. In the case of a care home fee trust, the property is transferred to the trustee, who will then use the income generated from the property to pay for the care home fees.
There are several advantages to putting your house into a trust, including:
- Protection of assets: By transferring your property to a trust, you can protect your assets from being used to pay for care home fees. This is particularly useful if you have other assets that you want to pass on to your heirs.
- Tax benefits: Trusts can also provide tax benefits, as the income generated from the property is taxed at a lower rate than if it were held directly by the individual.
- Flexibility: Trusts can be designed to be flexible, allowing you to make changes to the arrangement as your circumstances change. For example, you may want to change the trustee or add or remove beneficiaries.
However, despite these advantages, there is still a degree of perplexity and burstiness surrounding the use of trusts to avoid care home fees. This is largely due to the complexity of the legal and financial arrangements involved, as well as the potential for abuse of the system by individuals who wish to avoid paying care home fees.
It is also important to note that trusts are not a one-size-fits-all solution, and it is crucial to seek professional advice before setting one up. This is because there may be unintended consequences, such as the loss of eligibility for means-tested benefits, and the trust may not necessarily provide the level of protection that you expect.
In conclusion, putting your house into trust can be a useful way to avoid care home fees, but it is not a simple or straightforward solution. It is important to fully understand the implications and to seek professional advice before making a decision. Remember that trusts are a complex legal and financial arrangement and should not be entered into lightly.