“How can I afford care and protect my assets too?”

Are you concerned that despite a lifetime of hard work and managing your money carefully, your assets could be used up quickly if you require additional support at home or had to move into residential care? As more and more people are now living longer this is not an unrealistic prospect as care home fees run into thousands of pounds each year.

Some people who require care may be fully or partially funded by the NHS depending upon their needs. In other cases, the Local Authority will assess the person’s income and capital to calculate what they should pay towards their care.

Whilst it is impossible to know what the future holds for any of us, it is still possible to plan ahead in order to retain as many of your assets as possible within the family.

Suggested Action:

If you own your home jointly with your spouse, partner or civil partner, you could change the way in which you own the property.

You could then each make a Will to leave your respective half shares of the property in a trust.

After the first person dies, if the survivor needed care, the Local Authority could only take into consideration half of the property in assessing the value of the survivor’s assets, as the other half would be owned by the trust contained in the Will of the first person to die. Therefore, at least half the value of the property could be saved for your loved ones.

You could also create a Trust during your lifetime to try to protect all your property from residential or nursing fees.

“How can I safeguard my interest in a joint property?”

Have you considered purchasing a property with someone else or are you helping someone out with funds towards their own purchase and want to protect your interest?

Suggested Action:

A formal Declaration of Trust can do this. The contributions, shares and interests of all parties can be laid down in a single, agreed document so that on the eventual sale of the property everyone knows where they stand.

This can help avoid conflict and puts all parties’ minds at ease. If you have purchased a property without a Declaration there is no need to worry as Declarations can be drawn up with the agreement of all parties at any time.

“Do you receive a pension lump sum payment or death in service benefit?”

Have you considered the tax implications on your partner’s death if they receive one of the above payments following your death?

Any payment received by your partner will form part of their estate when calculating their Inheritance Tax liability. This could mean that your children or whoever you wish to ultimately benefit from your estates receive less money.

Suggested Action:

Rather than paying any such benefit directly to your partner which could be taxed on their death you should set up a pension by-pass trust.

Your partner can still benefit from the lump sum payment but on their death it will not form part of their estate for Inheritance Tax purposes. This means that your children or whoever you wish to ultimately benefit will receive more money.

“I would like to donate some money to charity in my will – will this affect inheritance tax?”

Gifts made to a UK registered charity in your Will are exempt from Inheritance Tax.

However, it is now possible to reduce the overall rate of Inheritance Tax on non-exempt assets from the standard rate of 40% to 36%.

If you leave 10% or more of your net estate to registered UK charities you can (in certain circumstances) pay Inheritance Tax at the lower rate of 36% opposed to the standard rate of 40% (on assets in excess of the Inheritance Tax threshold, currently £325,000).

This is why Attwaters Jameson Hill’s Wills, Trusts & Probate team is here.

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