Return of the 'Dementia Tax'?
The head of the NHS has reportedly re-ignited the debate in respect of the 'dementia tax'. Simon Stevens has said that the cost of care fees could justifiably be taken from the proceeds of property sales when a person in care dies.
With an aging population and squeezes on Local Authority funding it is understandable that some way needs to be developed for increasing care needs to be funded. But should that mean beneficiaries risk losing all their inheritance in some cases?
This debate highlights the importance of married couples and civil partners considering just how best they can mitigate for the future.
Typically, couples own a property as joint tenants and on first death the surviving partner becomes sole owner. If that person were then to go into care under the scheme suggested by Simon Stevens when they die the proceeds of their property sale would go to pay care fees which could lead to little or no inheritance to be passed on.
For most people this could be a step too far. So what can estate planning do to help?
The first step would be to sever the tenancy on the property and reside as tenants in common. The portion of the property owned by each partner would then be defined (generally this would be 50/50).
Continuing our scenario from above on first death the portion of the property owned by the deceased would not pass to the survivor but would be held in trust for other beneficiaries (generally children).
By doing it this way if the surviving partner goes into care then when they die only the portion of the property they own can be put towards care fees.
Whilst this is only one scenario it should be clear that this example does provide some protection. For further details on this and other estate planning issues please contact email@example.com