Many people consider drafting a will to determine how their estate will be divided upon their passing. If you own property and want to leave it to a loved one, this is a crucial step for you and for them. During our healthy years, we naturally don’t consider residential care; after all, it isn’t a nice thing to think about. However, it is a reality for many people that they may have to move to residential care, and often it is after their mortgage has been paid off in full.
Here, we examine your estate and residential care financial options.
Potentially Exempt Transfer
Giving anything of unlimited value without paying inheritance tax is possible via a Potentially Exempt Transfer, or PET, provided the gifter lives for the following seven years. The PET is included in the gifter’s estate and is subject to inheritance tax if they pass away during those seven years.
Many people choose to do this by giving their children money or property, allowing them to enjoy their inheritance, as the PET’s value does not count towards their estate. People may also make PET gifts because they are getting older or their health is deteriorating. They could wish to lessen the additional inheritance tax burden. This is uncharted territory, particularly regarding care facility costs.
Gifting
If you apply to a local authority for care funding, they will probably perform a financial evaluation. If they consider the gifting to be a “deliberate disposal of assets,” this will include any assets you may have given. As a result, the asset’s worth might be taken into account when determining how much you can afford for your care.
There is a risk that other considerations will be taken into account when it comes to care financing, despite the common misconception that the seven-year rule applies to all gifts. They will investigate the value of the present, when and why it was given, and your overall financial status.
To make sure you are aware of all the details, you should get legal counsel if you are thinking about giving a family member legal title to your property. Knowing your options and any possible repercussions is essential. Since we all hope it doesn’t come to that, individuals don’t often consider care fee preparation. Nonetheless, many individuals may require care for various reasons, so it’s best to be prepared for anything.
For professional probate advice, contact Probate a Will on 0203 9859554.
