How can Liferent Wills safeguard your home against care costs?

With the cost of care becoming increasingly expensive, more and more we are asked the question of “how can we protect our assets?” The answer is rather complicated.

This is a very complex area of the law, and there are never any guarantees, as the local authority can look as far back as they like when considering what assets you have disposed of. It is important to always remember that there is a rule against any intentional deprivation of capital, and this information is simply for estate planning purposes, answering the question of how you might best prepare to safeguard your assets for your family.

Liferent Wills can be an excellent tool when considering your succession planning.

If A and B are married and have children, and they own their property jointly, this is how they could utilise Liferent Wills:

A and B must first review the Title to their property – is there a survivorship destination? This would be written within the Deed as A and B own their property equally between and to the survivor of them. In simpler terms, it means that if A died, B automatically owns the entire property. This is not what we want to happen if we are creating Liferent Wills, as the Title Deeds to your property will take precedence over the terms of your Will. If their Title does contain this, we would ask that our residential conveyancing team discharge this.

A and B could then create Liferent Wills, whereby they leave their respective half shares of the property to their children whilst allowing the survivor of them (the Liferenter) the right to live in the property for the rest of their life as if they are the full owner but they will only ever own their one half share. Should the Liferenter require to go into a care home, the local authority could only consider the one half share owned by the survivor when assessing the assets rather than the full property.

As a Liferent is a form of Trust, it would need to be registered with HMRC and ongoing administration would be required. The Trust is only created on the death of the first party, and so the ongoing costs are less than those for a Trust that is created now.

If you would like to discuss estate planning or how this scenario may relate to your circumstances, please contact us at privateclient@gilsongray.co.uk.