Life Interest Trust Can Protect Your Assets from Care Fees

14 June 2019

When someone goes into care in England or Wales, the local authority will assess whether they are liable to cover their own fees or whether they are eligible for financial support. We explain how this works, as well as how a Life Interest Trust in your Will actually could potentially help to protect your wealth from care home fees.

Who Pays for Care Fees?

When someone goes into care, their local authority will carry out a financial assessment. This assessment will determine whether the person is eligible for funding from the local authority, or if they will need to cover their own care costs.

In England and Wales, if you own assets worth £23,250 or more, then you're liable to cover the cost of your care yourself. If the total value of your assets is less than £23,250 then the local authority will provide financial support to help cover your care fees.

Residential care is expensive, with some care homes costing thousands of pounds per week, and these costs can quickly mount up. For this reason, some people want to put protection in place to avoid the bulk of their Estate being swallowed up in care fees. There are strict rules on what is and isn't allowed though.

So What Can You Do To Protect Your Assets from Care Fees?

There are some measures that you can take to protect your money and assets from care fees. If you own assets, such as your home, jointly with your spouse or partner, then one option you have is to make a Will that includes a Life Interest Trust.

By including a Life Interest Trust in your Will, you can ring-fence your share of the property (say 50% for example) and place this into a Trust, giving your partner a life interest in it. This means that when you die, your 50% share of the property will not pass to them, but they will still be able to live in the property for the rest of their life (or sell it if required). Your 50% share will be held in a Trust and can be passed on in line with the terms of your Will when your partner dies.

This way, your share in the property doesn't actually form part of your partner's Estate after you die. So if they need to go into care in the future, your 50% share of the property will not be included in the value of their Estate when the financial assessment is carried out. This means it cannot be used towards their care fees and instead can be passed on to your children, grandchildren, or whoever you choose.

Your partner can also make a Will including a Life Interest Trust, which will work in exactly the same way if they die before you and then you go into care, instead of the other way around.

For more information and examples of exactly how a Life Interest Trust could help to protect your assets from being spent on care fees, see Can I Use a Will to Protect My Estate from Care Home Fees?

If you want to make a Will including a Life Interest Trust, we would always recommend that you seek advice from a professional Will writing specialist. At Co-op Legal Services we can help you to make a Will including a Life Interest Trust, so that you can protect your wealth for the next generation.

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