Can I use a will to protect my estate from care home fees?

Without the right planning, the value of your home could be lost to care fees in the future, but there are some steps you can take to protect your estate from care home fees using your will.

This is complex and shouldn't be attempted without advice from a professional will writing specialist.

Could your home be lost to care fees?

Paying for care fees in the future could reduce the value of the inheritance you intend to pass on. With the right planning, it can be possible for a couple to ringfence part of their estate and protect it from care fees. This requires specific planning and specialist advice from a will writing expert.

Without this planning, a couple's assets could be significantly depleted by care fees.

Take the following example:

Mr and Mrs Smith were in their 60s and had two adult children. Their joint estate was worth approximately £250,000, primarily made up of their home worth £240,000 and £10,000 of savings. They wanted to plan ahead so they put in place standard mirror wills. Their wills left everything to the other when the first died and then, when the surviving spouse died, everything would go to their children in equal shares.

A few years later Mr Smith passed away and his estate passed to Mrs Smith in accordance with his will. Mrs Smith continued to live independently for the next few years. Sadly, Mrs Smith later required residential care.

Mrs Smith was financially assessed by the local authority who calculated the value of her assets at £250,000. As this exceeded the £23,250 threshold she would have to pay the cost of her residential care in full. The residential home fees amounted to £30,000 a year and the matrimonial home was sold to pay for this. Mrs Smith then remained in the home for 6 years until she passed away. During this period she incurred £180,000 in care home costs (6 years x £30,000). When she died, her estate was worth £70,000. This was passed on to her children.

Protecting your home from care fees

This is a very typical scenario. We are often asked whether there is a way to protect assets through a will so that the children get the benefit from an estate rather than it being depleted by care home fees.

The good news is that it is possible to protect some of your estate by using certain trust structures in your will.

Using a trust to protect your estate from care home fees

Trusts can allow your surviving spouse to benefit from your estate after you've died but, at the same time, they won't actually own these assets. This means that if your surviving spouse is means tested, the assets held in the trust won't be counted as part of their estate.

You need to be advised properly by a will writing specialist about the choices available to you and what's involved. If you own a property, you would need to know how it's owned. There are two ways to jointly own your home - as joint tenants or as tenants in common and this difference in ownership could make a big difference to the protection afforded to your property in your will.

Under joint tenancy, when you die the legal ownership of the property will automatically pass to to the other joint owner. It wouldn't pass in accordance with the terms of your will.

Owning property as tenants in common means you each own a specific share of the property. This share will pass in accordance with the terms of your will.

How a trust works

If Mr and Mrs Smith owned their property and tenants in common, each owning a 50% share, they could then use trust wills to ringfence their share. With the right specialist advice, Mr Smith could have placed his 50% of the family home in a trust, while allowing Mrs Smith to continue living in the home.

The value of Mr Smith's share would be £120,000. When Mrs Smith is means tested for care fees, this £120,000 is held in a trust and isn't counted as part of her estate. So Mrs Smith's estate is worth £130,000. Over the next few years, Mrs Smith's estate is depleted by care fees until only £23,250 remained. At this stage, Mrs Smith would become eligible for help with her care fees.

When Mrs Smith dies, her remaining £23,250 is passed onto her children, along with the £120,000 that Mr Smith had placed in a trust. So they would receive £143,250 in inheritace - over double the £70,000 they would have received without the trust.

Calculate how much you could save with our trust Wills calculator

Get advice on trust wills

For a trust will to be effective, it's important to get specialist advice from a will writing professional. You can transfer the ownership of your home to tenants in common as part of this process. If you aren't sure whether you own your home as joint tenants or tenants in common, we can find out for you as part of our trust will writing service.

For more information see making a will, trusts and trustees.