THE CONSEQUENCES OF GIFTING PROPERTY AND ASSETS

For many individuals, the requirement to sell their house to pay for care is made all the more unacceptable because they feel that they are being penalised for their financial prudence. For many, this prospect is so intolerable that they consider gifting away their assets in order to avoid the consequences of the system. Our Helpline receives a great many calls on the subject, often seeking reassurance that their actions or intentions will prove effective.

In general terms, gifting should not be relied upon as an effective means of planning for long term care. It is difficult to predict how a transaction might be viewed in the future and before making a gift, a number of potential problems should be taken into consideration.

Gifts are irrevocable and the donor must realise that ownership has passed from them, permanently. Even though certain restrictions may be applied to the gift i.e a property is transferred to a child with a provision for the donor to have a lifetime tenancy, it should be remembered that legal ownership is now in the hands of the child. However good the relationship may be at the time, this may change in the future.

In addition, the new owner may also become restricted in terms of any benefits they would otherwise receive and they may also become liable for repairs and maintenance of the property.

Then we must consider the receiver of the gift and the events which might befall them. Divorce, is perhaps the most obvious potential problem since the ownership of the gifted property may then become part of any marital settlement. Bankruptcy and death may also render the strategy ineffective.

We should also remember that even when gifting to avoid care fees is successful, the consequence is dependence upon the State. As the financial resources of local authorities become ever more strained, the level of financial support for care may become more restricted. State funding support is likely to be at a basic level and it may well limit the choice of care available and the individual who may find him/herself unable to choose the style of care they would prefer.

As a means of protecting your assets, gifting is a strategy fraught with difficulties. If the gift is made early enough to avoid the deprivation rules then the individual will be relinquishing control for an extended period and will leave themselves exposed to the problems detailed above. If the gift is delayed to avoid these pitfalls it is likely that deprivation will occur.

	Paying for care Details of the issues of paying for care
	Protecting assets from care fees Details of how to legitimately protect assets from the cost of care
	Gifting to Protect Capital Bulletin How to obtain the CareAware bulletin on gifting
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