My spouse and I are fearful about dropping our £250k home to fund care prices – can we promote 49% to the youngsters for £1?
My wife and I are both 56 and in good health. Our house is worth around £250,000 and mortgage free.
I was wondering if selling my kids 49 per cent of the house would be a good way of ensuring they get something from the estate in the future.
Assuming my wife or I require self-funded care in the future, I am looking at how to protect their interests by providing my wife or I only 51 per cent of the value of the property should the house need selling to fund care.
I suspect that I would need some form of conveyancing assistance from a solicitor to draw up contracts and would sell them their share for £1 each. T.C via email
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Funding care: This reader is worried that their kids won’t be able to receive their home as an inheritance
Harvey Dorset, of This is Money, replies: Many people will have to confront care later in their lives, and the vast majority of these will have to self-fund it.
Currently, the upper capital limit for council care funding is just £23,250, meaning that if you own property then you are almost guaranteed to break this barrier.
In order to pay for care, you may have to use the value of your home to do so, depending on what other assets you have.
If you or your wife remain in the family home while the other goes into care, the good news is that your home will not be sold in order to pay for care costs. Instead, these will be claimed by the council upon the sale of the house after your deaths.
However, this will also not provide an inheritance for your children.
As discussed below, there are multiple trusts that could help you to pass on some of your wealth to your kids. However, it is essential that these are properly set up to ensure you don’t land in legal issues.
The fact that you are both 56 could help here, as making sure that part of the property is left in trust well in advance of you needing care will mean that you are outside of the seven-years considered under gifting rules.
If you need care within seven years of the assets being moved into a trust, then it could be considered deliberate deprivation of assets.
This is Money spoke to two financial advisers to find out what you can do to ensure your children receive an inheritance further down the line.
Trust benefits: Billy Amber says a discretionary trust could help to pass your house to your kids
Billy Ambler, independant financial planner at Flying Colours, replies: The question that you have asked is a potentially complex one – you would need a competent solicitor who works in this particular field to look into this for you and advise how best to proceed.
If you were to sell 49 per cent of the property to your children, there are quite a few things to consider.
One is the issue around selling a property for under market value and the possible taxation that may arise on this.
Maintaining a benefit of the property and the possibility of needing to pay market rent as a result, is also a concern.
There may be stamp duty increases in the future, plus affordability implications for your children on other possible property purchases – all this needs to be thought through.
From a financial planning standpoint, however, there is a simpler solution to protect your children’s interests and to make sure your estate cannot be sold to fund later life care.
By using a discretionary living trust with a tenant in common arrangement, you and your wife would still own the property together, with each of you having a distinct share or percentage of ownership.
You would retain ownership so you would not have to pay rent on the property for the trust to stand.
Presuming you and your wife each own 50 per cent of the property, then 50 per cent would be transferred to your beneficiaries (your children) on the first death, and the remaining 50 per cent would still be owned by the surviving spouse.
Due to the legalities around this type of trust structure, the local authority would not be able to force the sale of the property to pay for care.
On the death of the second tenant in common (the surviving spouse) the full value of the house would then belong to your children within the trust.
This kind of trust also lays out how assets will be divided once you both pass away – be that equally between your children or otherwise. It guarantees that your wishes are carried out and provides clarity for your children.
However, you would need to make sure that the trust could be easily unwound once you have both passed away.
Your children would also need to be aware of potential capital gains tax (CGT) liabilities if they were to keep the house and then sell it in the future for an amount that is significantly more than it was worth on your deaths.
My advice would be to ensure that this is properly drafted alongside an updated will, and this should be done by professionals who are familiar with this type of arrangement.
Priorities: Kev Burns says it is best to establish what you want to achieve for you and your kids in the future
Kev Burns, chartered financial planner at HFMC Wealth, and @the_moneypt on Instagram, replies: Firstly, congratulations on taking the initial steps toward shaping your financial future.
This is often where many people stumble, so it is encouraging to see you thinking ahead.
Step 1: Identify what matters most about money to you right now
Before diving into potential solutions, it is crucial to ask yourself: What is most important thing about money right now?
Is it ensuring you and your spouse have sufficient funds for potential self-funded care?
Or is it leaving a meaningful inheritance for your children?
Perhaps it is another priority altogether.
Taking the time to define what matters most will guide all your future financial decisions.
Step 2: Set your goals and prioritise them
Once you have identified what is important, the next step is to establish specific goals and rank them by priority. This is critical because some priorities may conflict.
For instance, if self-funding care takes precedence over leaving a legacy, selling a portion of your property to your children now may not be the best course of action.
Step 3: Attach monetary values to your goals
Quantifying your goals helps bring clarity and structure to your plan. For example:
If care costs average £60,000 per year, and you estimate needing care for 2–3 years, you may require around £240,000, adjusted for inflation.
Assessing your current financial situation is essential here. If your wealth is primarily tied up in property, accessing those funds when needed can present challenges. After all, you cannot sell just a bathroom if you need £60,000.
If your primary asset is your home, here are the key options to consider:
Selling your property
Selling your house can unlock equity, but it also involves significant drawbacks:
You may need to relocate while dealing with poor health.
Costs associated with selling and buying, such as legal fees and moving expenses, can quickly add up.
If your children are co-owners of the property, they could face capital gains tax on their share, reducing the available equity.
Equity release (lifetime mortgage)
Equity release allows homeowners over 55 to borrow against their property, with repayment deferred until you pass away or enter long-term care. However:
If your children are legal co-owners of the house and under 55, this option won’t be available.
Under current rules, you will only need to fully self-fund care if your available capital exceeds £23,250. The value of your home will likely be considered in this calculation.
A property trust will can safeguard part of your property’s value, ensuring some of it is passed to your beneficiaries while providing a safety net for care costs.
The most important aspect of financial planning is maintaining flexibility and freedom. Your priorities today may shift over time, so it is vital to avoid decisions that could limit your options in the future.
The cornerstone of a successful financial strategy is a goals-based lifestyle plan, reviewed annually to ensure your objectives and strategies remain aligned.
A highly qualified financial planner and other professionals can guide you through this process, helping you identify your goals, explore your options, and create a plan that adapts as your circumstances evolve.
Taking this step ensures your financial future is secure, flexible, and aligned with your priorities.
