and why gifting away assets doesn’t always work
Many of our clients come to us as they are worried about their future and the potential need for them to go into a care home and pay the extremely high fees. Our clients understandably seek advice on how to protect their assets and their home from needing to be used to pay these fees.
The common term that we hear around the subject of care home fees is the ‘7-year rule’. There is a misconception that if you give away your assets, provided you then survive for 7 years, your assets are ‘safe’ from being used to pay for future care fees. The 7-year rule however relates to Inheritance Tax planning and not to care fees.
When it comes to care fees, the Council does not apply a time limit or 7-year rule and instead they look at intent. For example, what did you intend to do when you gifted that asset away. If the Council believe you made the gift to avoid paying care fees, they can refuse to fund your care, still count the assets as ‘notional capital’ in means testing or even pursue repayment.
Leicester City Council’s own guidance clearly states: “if we find that you have given away assets to reduce your contribution, we will treat you as still having them”.
Here at Alexander & Co we understand why our clients might want to protect their assets from care fees, however it is so important to understand everything properly before gifting away your assets. If you would like to discuss your future wealth planning, including care fees planning, then please get in touch to speak with our specialist team.
