If during the lifetime of you both one of you may have to enter a residential/nursing home the value of the matrimonial home is disregarded by the local authority.

The local authority will only take into account savings held in the name of the spouse/partner who goes into care and half of any joint accounts.

However what usually happens is that one of you dies and the survivor inherits everything and  if the survivor ends up entering a care home the entire estate is included in the local authority financial assessment.

The local authority will only allow you to keep £22,250 (2008/2009) of your investments out of which is taken your funeral costs. As it costs approximately £400-£500 per week per person for residential care this could mean a financial disaster.

The biggest asset most people have is their house. To prevent the local authority being able to include the whole of the family home in this situation we change the way you own your home from a joint tenancy where the property passes automatically to the survivor to tenants in common where each of you owns half of the property each. It is simply an agreement to own half the property each and does not involve any mortgage lender.

We then prepare two Wills with a protective trust in each Will so that when the first of you dies his or her share (usually 50%) in the property goes into trust to the children. This share in the property cannot be claimed by the local authority and neither can it pass to a new marriage partner.

  The survivor can: 

• continue to live in the property for as long as he/she wishes;
• sell the property and buy a more expensive property and use part or all of the share in trust to purchase the new property if necessary (the trust fund has to be invested somewhere and investing in property is as good as anything else);
• sell the property and buy a property valued at half or less than the value of the existing property in which case the survivor can enjoy the income from the trust fund;
• sell the property and move into a care home or somewhere else and enjoy the income from the trust fund or release the capital value of the trust to the children if the income is not required
• decide that he/she would like to own the property outright again and pay the equivalent in money of the share in trust to the children perhaps from the proceeds of an insurance policy.

With the Protective Trust the survivor has got the freedom to do anything except spend the half share which is held in trust because if the survivor can so can the local authority.