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Tenants in Common and Care Costs

Planning to move into a care home and leaving behind a family home and all the familiarity that entails, can be stressful for many. The move is a reluctant but necessary one and is often made all the more stressful and upsetting through having to sell a much-loved family home to pay for care home fees. In some cases, you can get an amount of funding from a local council, but the thresholds for determining your financial worth are very low and often mean that the family home has to go.

But is it necessary to move into a care when unable to look after yourself anymore? We tend to assume it is and that there are no alternatives, but that simply isn’t the case.

It’s not surprising then that people look for alternatives; how to fund care while still protecting the family home. One way to do this is to pay for live-in care instead. Of course, that still costs money but it is possible to use some of the equity in your home to do this and still leave plenty for a partner of for family members to inherit.

Other options could include placing your property in trust or transferring ownership of the family home to children but these both constitute a legal minefield and can often have unintended consequences.

A little known method of avoiding having to sell your home to pay for care home fees is to change the ownership of it to tenants in common.

What does ‘tenants in common’ mean?

This refers to people who co-own a property where each owns a specific share of the property. Most often it will be two people who each own 50% of the property although there may be instances where more than two people are tenants in common or tenants can hold unequal interests in the property.

What you need to do

If you and a spouse, partner or other co-owner of the property decide to convert your ownership to tenants in common the first thing you must do is engage the services of a properly qualified solicitor who is fully experienced in property law and you can find one through the Society of Trust and Estate Practitioners.

When you become tenants in common you will be able to leave your share of the home to anyone in your will. Your will effectively provides a ‘flexible life interest’ for your spouse or partner which ensures that on your death your share of the property is held in trust and gives them the right to carry on living in the property until their death.

What is the advantage?

Should your surviving spouse or partner have to go into care, any local authority means test could only take into account the value of their share of the property when assessing how much they would have to pay for their care. In this case the value of their share could even be assessed as nil because it would be very unlikely that the property would be of saleable interest to anyone, meaning the whole value of the property could be excluded from a means test assessment.

A better alternative

Whatever you decide to do with regard to paying for later life care, remember that care homes are not the only option. Independent research from the not-for-profit organisation The Live-in Care Hub has shown that people are healthier and happier staying in their own homes and being cared for by a professional carer who either lives in or visits for several hours each day. And it is financially comparable to care home fees.

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