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The tax man, retirement & care fees

Even clever thinking needs regular sense checks.

A typical scenario: One Partner (commonly the wife but could be either partner) holds the couple’s savings in their sole name, usually because their partner is a non tax payer: this helps minimise the joint tax liability on their savings.
But…..what happens if that person needs to go into care?
Under the current charging regulations, the individual is assessed on their own income and capital.  This includes state pension; 50% of any occupation or private pension; all of the capital in their sole name and one half of any capital held in joint names.
On reaching retirement it’s a wise idea to review your financial circumstances and consider whether your assets need re-distributing between you.
Typically, you may want to consider an asset protection trust or a Trust within your Will to protect your family wealth whilst still providing for each other.
Owning a second property in joint names can maximise the use of annual allowances for capital gains tax although you may need to transfer the property into joint names with the help of a conveyancing team.
If your partner does enter into care it is a good idea to separate any joint assets as soon as possible, so that it is clear how much money is available.  This may include severing the joint tenancy of your property. In April 2016 new rules come into play: “Care Accounts” will be created to keep a track of the amount of money spent on care.
A simple review of your current circumstances, your wills, powers of attorney and the use of trusts could save you thousands in the future.
Call us today on 0800 088 6004 and find out how we can help you ensure that your once clever planning still makes sense.