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As life expectancy in the UK continues to increase, many of us are planning for our future, looking at the best ways to provide both for our own later life (including care costs), but also for our children and their families.

Everyone’s circumstances will differ and when looking at any aspect of legal planning it is important to discuss pensions, savings, income, family members, financial dependency, property, investments, expenditure and much more. At Macnabs we work in conjunction with independent financial advisers, stockbrokers, accountants, and investment managers to ensure that a holistic approach is taken when planning for your future.

It is important to understand the legal implications and tax benefits of your decisions as getting it wrong can be costly - for example, losing the legal right to continue occupying your home, losing Capital Gains Tax or Inheritance Tax advantages by transferring a property (e.g. to a relative or to a Trust) or falling foul of the Council’s rules against deliberate deprivation of assets for care cost purposes.

One of the more common planning strategies undertaken by couples in connection with potential future care costs is done by way of a couple’s Wills. Where a property is owned jointly by a couple, it is often the case the surviving spouse inherits the whole property following his or her spouse’s death. If the surviving spouse were to ultimately require long-term care outwith the home, the empty house could be subject to a care cost assessment in full.

If, however, the Will of the first spouse to die left everything to the surviving spouse except their share of the family home, then this would effectively ring-fence this share of the home, which could be left to someone else under their Will. Most frequently, the first deceased’s share of the home is left to a Trust, enabling the surviving spouse to continue benefitting from the property for as long as he or she wishes (subject to meeting all Council Tax, utility accounts and all other outgoings associated with his or her occupation of the property). On the termination of the Liferent Trust, being either the surviving spouse’s death or their renunciation of their benefit, the property would pass to the ultimate beneficiaries named in the Will (usually the children).

A Liferent Trust arrangement has the advantage that the capital value of the Trust’s share of the property should not be taken into account by the local authority in calculating care costs contributions in the event that the surviving spouse ever requires long-term care, as this share of the property is not owned by the surviving spouse.

This type of planning can also be useful where a couple have children from previous relationships and wish to provide a home on death for the surviving spouse, but ultimately wish their share of the property to pass to their own children.

If such a Liferent Trust is to be included in a Will, it is important that the title deed for the jointly owned property/properties does not contain a survivorship destination, which would automatically transfer the deceased’s share of the property to the surviving owner outright, regardless of the terms of the deceased owner’s Will.

Like most areas of legal planning, there can be no one-size fits all approach to care cost planning, and planning in later life. Our highly experienced team will look at you as an individual and assist you in all aspects of planning for later life, whether this is preparing a Will tailored to your individual circumstances, helping you with granting a Power of Attorney, planning for future Inheritance Tax liability, looking at funding for any future care needs, or assistance with guardianship applications and help for family members who are less able.