Planning for Long Term Care

This article featured in our June 2021 newsletter.

Many people are worried, as they grow older, about what will happen if they need to go into long-term care. We need to be very careful not to get caught up in the hype about going into care as you grow older. Statistically speaking, only 4% of those who are over 65 years are in residential care. That means 96% are not! Of those who are over 85 years of age, around 15% of those are in residential care. Again, that means a very large percentage (85%) of those over 85 years of age are not in social care. Taken against the average lifespan in Scotland, if you’re reached 85 years of age, you’ve already beaten the average lifespan for both men and women!

All of that being said, there is still a concern that if you have to have residential care that your assets will be depleted to pay for it. We’re frequently asked what can be done to prevent assets being used to pay for residential care. In this article, we outline some options for your consideration.

How your contribution will be assessed

Before doing that, we should consider the assessment of your contribution. You’ll have to declare any gifts you’ve made within the 6 months before this assessment takes place. You also have to disclose if you’ve disposed of your house before you entered into care. It is important to be aware that the information relating to the disposal of your house applies even if you sold or transferred the title to your house to a relative many years before the assessment takes place.

If you have capital over a certain level (including the value of your house), you’ll be assessed as being able to meet the full cost of your care. However, your home will not be classed as capital if certain relatives still live there.

What are some of my options?

The focus clients have when discussing this subject invariably ends up being on the house and what can be done to avoid it being sold to pay for residential care. Here are some things you might think about if you are worried about this.

  • You could consider gifting your house to your children. There are inherent dangers in doing that because once you transfer title to them, they can sell the house from under you. Alternatively, if they’re declared bankrupt the house will have to be sold to meet their debts. If they were to divorce from their spouse or dissolve their civil partnership, the house may have to be sold as part of the settlement with the former spouse or partner. In either case, the house would be lost and you would lose the right to live in it. To prevent this happening, you could reserve a liferent in the house. This gives you the right to live in the house until your death. However, if you are assessed for residential care, the existence of a liferent in the title might indicate that the transfer of the property to your children was not a genuine “gift”.
  • As an alternative to transferring the house to your children, you might consider transferring it into a Discretionary Trust. By doing that, you will no longer own the house. It would also preserve your right to continue to live in the house. In addition, the trust would not become bankrupt or get divorced! However, if you do decide to transfer your house into a Trust, you must be very clear that the aim isn’t simply to avoid the cost of residential care, especially if it happens within 6 months of your going into residential care as the local authority could challenge the transfer of the property into the Trust.
  • You may decide, as you get older, to realise some of the capital locked up in your house. You might consider a lifetime mortgage or other equity release vehicle which would allow you to “cash in” on your house whilst still living in it. There are various different types of lifetime mortgages available, some of which allow you to “roll up” the interest so you don’t have to make any payments. Because this is a commercial transaction, should you require residential care, it is unlikely that the local authority would challenge the arrangement although the value of your house after deduction of the outstanding balance to the lender would still be taken into account.
  • Another option you might care to consider is to take out insurance. If you did this and required residential care, the insurance policy would pay out a regular income which could be used to offset the cost of your care. If you did have sufficient income from this source, there would be no need for the local authority to carry out a means assessment. The premiums for this type of insurance depend on your age and state of health when you take the insurance out.

Get in touch for more information

There is no “one size fits all” solution to this problem and when we are asked for advice in this area, we will ask for as much information as possible to be made available. We should also say that there may well be issues of Inheritance Tax and Capital Gains Tax that need to be addressed.

Remember the percentages. In real terms, very few of the elderly will actually require residential care. However, if you are worried about this and would like to discuss how you might plan for the future – whether it’s for yourself or a relative – please get in touch.

 







    New Glasgow office for Wallace Quinn

    During lockdown we’ve been busy relocating our Glasgow office to larger premises.  We’re now at Suite 1/3, 21 Glasgow Road, Baillieston, G69 6JT.    Our new location is less than a mile from our old home and has plenty of off-street parking. Inside, we have lots of room to accommodate our growing number of staff, and spacious air-conditioned meeting rooms to see clients.  Customers in the East also able to visit us in our equally spacious Livingston office at Fairbairn House, 6 Fairbairn Place, Livingston, EH54 6TN

    Blog – Why NOW is the time to sell a property

    young couple showing off keys to house If you’re thinking of selling your property, now is most definitely the time to be discussing this with our Estate Agency team.  At Wallace Quinn we offer a full estate agency and conveyancing service, meaning we offer clients a one-stop shop for every step of the house-sale process.  We work with Keys Estate Agents and the ESPC to offer a top-class valuation and marketing service, with our in-house solicitors delivering a fast and hassle-free conveyancing service.

    Here’s some of the reasons you should be picking up the phone or completing the contact form at the foot of this page and taking the next step on your property journey.

    written by Chris Kane, Sep 2020

    The Market is Open For Business

     

    All trades and businesses involved in house moves and sales have been working incredibly hard in recent weeks to put in place measures to allow them to operate in a Covid-safe way, which means the market is now operating well.

     

    Demand is back

     

    We have seen quite a surge in the second-hand property market, as all of the pent-up demand of the last six months has been unleashed at once.  We’re seeing an unprecedented number of enquiries from people looking to move.

     

    Supply Is low

     

    Quite simply, there are more buyers out there looking than there are properties available to buy.  This means much more interest in the properties on the market, which in turn is leading to good prices and quicker sales than we would normally expect at this time of year.

     

    Mortgage Rates are low

     

    Interest rates are the lowest they have ever been in 400 years at just 0.1%.  This means mortgage rates are also historically low and that makes the prospect of borrowing more to move home appealing to many buyers.

     

    First Home Fund

     

    The Scottish Government’s First Home Fund is a £200 million pot of money which can give first time buyers up to £25,000 towards their first property using a shared equity scheme.  Unlike the popular ‘Help to Buy (Scotland)’, the ‘First Home Fund’ is also available for second-hand property purchases and is definitely giving a boost to the market.

     

    Changing Demands

     

    Months of lockdown has had a profound impact on how we view and use the space we call home.   With many more people living AND working from home, many have begun to reassess what they need from a property, with outdoor space and home offices now high on the wish-list of property hunters.  People who perhaps wouldn’t have dreamed of moving at the start of the year are now serious potential purchasers.

     

    Ready to find out more?

     

    If you’re ready to sell your property and would like to discuss what’s involved and get a quote for our services, complete this form and one of our team will get back in touch with you within one working day.

    If you are looking to buy property and there is a closing date in the next 24 hours, please telephone to discuss

     

    Home buyers could save over £2000 in tax with temporary LBTT changes

    The starting threshold for Land and Buildings Transaction Tax ( LBTT) on residential property sales in Scotland is rising from £145,000 to £250,000 from 15 July 2020 until  31 March 2021.

    This amounts to over £2000 in savings on a property bought for £250,000 and means that where the Additional Dwelling Supplement (ADS) does not apply, no LBTT will be payable.

    To find out how this change affects you, click on the relevant link below:

    I’m a first time buyer and I’m buying a property costing less than £250,000

    Good news – you’ll pay no LBTT at all on your purchase, as long as your purchase is AFTER 15 July and BEFORE 31 March 2021.  All other legal fees and outlays remain unchanged. The changes to LBTT have no impact on Help To Buy (Scotland) or the First Home Fund.

    I’m a first time buyer and I’m buying a property costing more than £250,000

    You will pay LBTT, but NOT on the first £250,000 of the purchase price (as long as your purchase is AFTER 15 July 2020 starts and BEFORE 31 March 2021).  You can work out your LBTT as follows:

    • The first £250,000 of purchase price             0%
    • Then £250,001 - £325,000                              5%
    • Then £325,001 - £750,000                                10%
    • Then over £750,000                                        12%

    The changes to LBTT have no impact on Help To Buy (Scotland) or the First Home Fund.

    I already own a property, but I would like to purchase another one costing LESS than £250,000

    You will not incur any of the standard Land and Buildings Transaction Tax, but you will be liable for the ‘Additional Dwelling Supplement’, which is at 4% of the total purchase price.  For example, if you buy a property at £100,000, you’ll pay an ADS of £4000.

    I already own a property but I would like to purchase another one costing MORE than £250,000

    If you purchase between 15 July 2020 and 31 March 2021, you can work out your LBTT as follows:

    • The first £250,000 of purchase price             0%
    • Then £250,001 - £325,000                              5%
    • Then 325,001 - £750,000                                10%
    • Then over £750,000                                        12%

    In addition, you will be liable for the ‘Additional Dwelling Supplement’, which is 4% of the total purchase price.  For example, if you buy a property at £300,000, you’ll pay an ADS of £12000


     

    You can read more about the Scottish Government’s plans on their website.  

    If you have any other questions, please get in touch and discuss this with one of our solicitors.