Pensioners forced to sell homes

Pensioners forced to sell homes

As studies indicate the average annual care home cost at £30,000, the likelihood of elderly people being forced to sell their homes increases.

The data by Prestige nursing indicates that costs are rising ten times faster than pensioner incomes, with an average room price growing by 5.2% or £1,536 over the past year. This means even the wealthiest of pensioners are having to put their homes up for sale in order to meet the cost of care they require.

If an individual lacks property to sell however, the funding of their care cannot be provided for through the sale of their home and they therefore qualify for state support. People are thus increasingly analysing the ways in which their home can be saved largely through the means of gifting.

For many home owners, prior to entering residential care, they may pass on their home by creating a trust with their children as the beneficiaries. This involves altering the joint ownership of the property to tenants in common, which in turn allows the individual’s share of the property to be left to someone specified in their will.

A ‘flexible life interest’ is then created for the individual’s spouse. This allows them to remain living in the property for the remainder of their life should their partner die, with the deceased’s share being held in trust. Should the remaining partner eventually need to go into care, the local authority (LA) would only consider their share of the property which would expectedly be reduced to nil. This is due to the unlikelihood of anyone wishing to buy this respective share.

If the individual continues to live 7 years after giving away the property it will no longer be counted towards the value of their estate and thus not considered within the governmental means test. They are still permitted to reside in the property as long as they do so for at least 7 years, pay their share of bills as well as rent in line with similar properties in the area. If the new owners – likely to be children – also live in the property, rent may not have to be paid.

This “solution” is not however without its own potential flaws. If the new home owners were declared bankrupt or wished to get divorced, they may decide to sell the home and ultimately force the original owner out. In cases where parents are continuing to live in homes they have gifted to their children, the success of the arrangement is greatly dependent upon the relationship between all parties involved.

Georgia Owen

Georgia is the Content Executive and will be your primary contact when submitting your latest news. While studying for an LLB at the University of Liverpool, Georgia gained experience working within retail, as well as social media management. She later went on to work for a local newspaper, before starting at Today’s Conveyancer.

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