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Protection of Assets
As we get older, and concerns grow that we may come to depend upon the state for care in a nursing home, we naturally become worried that assets, hard earned over many years, will be taken by the state to pay for such care.
There are no magical solutions to this problem, and everybody's situation is different. Nevertheless, there are circumstances where arrangements can be made, fairly cheaply, to minimise or to reduce the problem.
For an older couple, one scenario is that after the death of the first partner, the chances are much increased that the survivor will need residential care, either then or within a few months. Where two may have been able to survive independently, one may not be able to.
If the couple have severed the joint tenancy in their home, and then made wills in which, on the first death, the share owned by the partner who dies is given direct to the children, subject to provisions which can protect the right of the survivor to continue to live in the house, this simple arrangement produces the following effect.
First, half the value of the house is transferred immediately on that death. If the survivor were to go into residential care within a few months of that death, the first £16,000.00 or so of the survivor's capital is protected against being used toward the cost of care home fees, and other share in the house has been perfectly properly passed to the children. For more wealthy clients, this arrangement will not be effective, but for many of our clients, this arrangement would protect much of the estate.
Clients could also, if they wished, then enter into a deed of variation after the first death. The survivor and children may choose between them that the house be transferred back into the name of the survivor, or perhaps a further share of the house could be transferred to the children.
It must be understood that neither party would be obliged to do this, and there are clear risks, and the protection given is only partial. Nevertheless, in appropriate cases, given this arrangement will provide the best balance between certainty and effectiveness.
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