Your money: Passing on assets can backfire

Many gave away assets years ago but that is no barrier for authorities who are pursuing families for the money. Some have hit families with shock bills of as much as £120,000, which they are obliged to pay even if the money now belongs to others or has been spent. Experts say older people must think carefully before gifting assets, as you or your children could pay the price later.

TAKE CARE 

The NHS may look after your aliments free of charge, but if you need care then in most cases you will have to foot the bill yourself.

You now have to pay the full cost of care in later life if your wealth totals more than £23,250, which includes your home and savings.

With care home costs ranging from £30,000 to £50,000 a year, families risk seeing their fortunes depleted and inheritance dreams ruined.

Some try to get round this by giving their belongings away to their loved ones, but there is a catch.

This is known as “deliberate deprivation of assets” and if the local authority deems you have done this to avoid paying care home fees, it will still take the money into account, even if you no longer legally own it.

They have the power to recover care costs either from you or the person who received your assets, such as children. That is exactly what councils are doing and the bills can be huge.

DEBT RECOVERY 

Merton Council recently recovered £120,000 and £90,000 from two individuals, while Havering recovering £52,290 from one.

North Tyneside has recovered a total of £289,000 over three years including £77,756 from one person, while Leeds Council has collected over £106,500 so far this tax year.

This data came from a Freedom of Information request by the website lawyersforlaterlife.org and solicitor Ben Tyer warned: “There is a myth that local authorities can only go back seven years to uncover attempts to avoid paying care home fees, but there is no time limit.”

Transferring your home to your children or into a trust does not guarantee protection either, Tyer added. Authorities will examine the timing of a gift or transfer, and whether the donor had a reasonable expectation of needing care at that point.

“If the person was fit and healthy and could not have foreseen the need for care at the time then it would be unreasonable to view it as trying to avoid care fees,” he said.

Tyer urged couples to review their wills and take advice on safe ways of limiting their exposure.

GREY ZONE 

MatureThinking.co.uk founder Deborah Stone, who advises companies on services for older people, said the elderly should think carefully before passing on assets during their lifetime. “You may need that money later for care costs,” she said.

Lump-sum payments made to loved ones, gifts and wealth held in a trust may all still be treated as if the money is yours. “This also applies to assets reduced by living extravagantly – for example, gambling,” she said.

Local authorities can ultimately pursue debts through the county court. Stone added:”Although only after exhausting other methods.”

Planning is tricky because of grey areas. “It is not possible to predict with certainty whether the local authority will raise the issue in future,” she said.

Visit online at www.express.co.uk/money