On the face of it this seems an attractive solution, but you need to bear in mind that if you are giving away your home there is a risk of losing your right to continue living there as summarised below:
• The recipient may wish to sell the property. As the legal owner they will have the ability to sell your property.
• The recipient may divorce their current spouse. Should the recipient go through a divorce, the house you have gifted them will form part of their assets which will now be part of any potential divorce settlement potentially removing your ability to remain living there.
• The recipient may become bankrupt. Should they become bankrupt, as an asset of theirs, the house you have gifted them will pass to their creditors to repay their debts.
• The recipient may die before you. Should they die before you, as an asset of theirs, the house will form part of their estate and pass to people who may not wish to allow you to continue living there.
By making an outright gift of your property you are placing enormous trust on someone else in respect of what is almost certainly the most important asset you own. There are also tax implications of doing this.
Furthermore, when the Financial Assessment is done the Local Authority will review on a very critical basis when the property was gifted and what the reason of the gift was. If the Local Authority can prove that a property was given away simply to avoid the payment of nursing home fees then they have the power to bring back into account the value of the property in the Financial Assessment by using what are known as the Deprivation of Assets Rules.
If the Deprivation of Assets Rules are applied then you will no longer own the property and have no automatic access to the funds, notwithstanding that you will be deemed to still have the asset(s) which you have given away. This is called the Notional Capital rule and it is important that you are aware of this rule before considering any possible ways of mitigating the effects of care fees.
The Local Authority’s powers are extensive. They can seize assets in order to provide funds to pay fees. This means that they can enforce the sale of the home or order the sale of any other asset in order to meet the fees. Only when all the avenues of possible funding have been exhausted will the Local Authority contribute towards the fees.
Assuming that that you are currently in good health and there is no immediate prospect of you needing care then rather than an outright gift of the house and other assets with the associated risks you could consider one of the following options below:-