Question 5
My mother, who is now 82 but in good health, is always urging my brother and me to arrange for the title to her home to be changed into our names, as she fears that at some time in the future she may need to go in to nursing home care, in which case our ‘inheritance’ may be used up in paying nursing home fees. We fear there may be dangers in such a course – are we right?
You are right to think that what your mother suggests might present dangers.
By far the most important of these is that changing the title of the house to you and your brother may put your mother in a difficult position should either of you die, become incapacitated, get divorced or be made bankrupt. Your mother might even be made homeless.
There are other safer choices, such as making the property over to a suitable trust, which should enable your mother to part with ownership of the house whilst safeguarding her future occupation. Since the passing of the Finance Act 2006, such a transfer may have adverse Inheritance Tax implications however, depending on the value of the home.
The National Assistance (Assessment of Resources) Regulations 1992 (Regulation 25) allow the local authority, if it feels that a resident (of a residential or nursing home) has deprived herself of a capital asset to help cut her accommodation charges, to treat the resident as still having the asset. The Regulation applies to all property and not merely to houses.
There is no legal limit to how far back the local authority may look to help them detect removal of capital, though they must be able to establish that avoiding care costs was a significant motive (though not necessarily the only motive) for the move. The older and frailer the homeowner and the shorter the gap between the move and admission to care, the easier it will be for the local authority to decide that such a motive existed, in which case it would treat your mother as still owning the house.
These dangers are not impossible to avoid, but your mother does need specialist legal advice.
