When contemplating old age many of us are concerned about the
cost of care home fees and of being forced to sell our homes to
meet the costs. Giving your property to your children now may seem
like an attractive option, but is it?
When assessing whether or not you are eligible for assistance
with long-term care fees the Social Security Department will carry
out an assessment of your income and capital assets to establish
whether or not you fall under the capital threshold, currently
£13,706 for an individual or £22,718 for a couple.
In carrying out that assessment, Social Security will consider
if you have directly or indirectly deprived yourself of any income
or capital in order to qualify for income support. If the
department finds that you have, then the amount of that income or
capital will be included in your total income, or capital as the
case may be.
What this means is that should you transfer your property into
your child or children's names then it is likely that the
department would view this as a transaction entered into purely to
avoid paying fees and you would be assessed as still owning the
asset; particularly in circumstances where you were to continue
living in the property. This is also the case if the transaction is
entered into at less than market value.
In addition, there is an increased risk to you because once the
property is transferred out of your name and into your child or
children's names, it becomes their asset. If there was a family
fall out your children could decide to sell your home from under
In addition, if one of your children died before you, the
property would pass in accordance with their will or on an
intestacy to their direct heirs (which would not be you if they
have children or surviving siblings). Your ability to live in the
property would then be in the hands of the beneficiaries of their
If a child went 'en desastre' (bankrupt) then the house
may have to be sold to pay their creditors. If a child was divorced
then the property could be taken into account in any
Are there any other financial arrangements that could be put in
It may be possible to place the property into a trust. However,
the costs of establishing a trust and the annual management charges
would be a factor to consider given the value of the assets in
question; and as the law stands at present, Jersey real property
cannot be held by a trust and therefore a company would have to be
The property would have to be transferred into the ownership of
the company (thus incurring stamp duty) and the shares of the
company would then be held by the trustees. This would incur
additional professional costs and annual charges payable to the
Company Registry. In addition, it remains the case that any large
transfer of assets is likely to be examined by the Social Security
Every case is reviewed by the department on an individual basis
and while there is no timeframe set out in the law before which
transfers of assets are exempt the more time that has elapsed since
the transaction the less likely it is to fall within the 'cost
Comfort should be taken from the fact that it is not Social
Security's policy to force a claimant to sell their own home to
meet the cost of residential fees, if they do not have sufficient
income to meet the costs of the fees. However, any contribution
made by the department to those fees will be treated as a long-term
(interest free) loan and a charge will be taken over the
claimant's property which will be called in when the property
is subsequently sold, usually on the death of the claimant.
Possible changes on the horizon
This is an area of law which is currently under review. The
Social Security Department has revealed that it has plans to
introduce a 'universal' benefit, to which everyone will
contribute during their lifetime and which will then be placed in a
pot to meet the long-term care needs of the Island's
The department has indicated that in future a property up to the
value of £750,000 could be disregarded when an
individual's finances are assessed. The department hopes that
the universal benefit could be introduced as early as 2013, but
substantial legislative changes will have to be put in place first.
Accordingly, before considering whether to enter into some form of
transaction with your children you should seek legal advice.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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