Could my children’s money towards bungalow be taken in care fees?

My children have both put £80,000 into the purchase of my retirement bungalow. I didn’t have enough money so they’ve invested that money in a place for me to live.

We couldn’t put it in joint names because I had to be a pensioner to be able to live there. How can I make sure they don’t lose their investment if for some reason I do have to go into care.

I’m really worried about them losing such a huge amount of money.

Tanya Jefferies, of This is Money, replies: Your children have generously helped you buy a suitable home for your old age.

You understandably don’t want your local authority to include their contribution in any financial assessment of your own assets should you need care in future.

But as things stand, your bungalow is in your name only, by the sound of it because the retirement development you have moved to only permits people over a certain age to live there.

However, it may be that it has no age limit on ownership, only on residence – you should double check this. 

We asked a lawyer experienced in social care cases to explain your options to safeguard your children’s stake in your property.

Ben Tyer, private client solicitor at GLP Solicitors, replies:  As the bungalow is in your sole name it will be treated as belonging to you, so it will be included in any assessment of your financial means to pay for care thereby putting you above the £23,250 threshold categorising you as being able to pay the full cost of care.

You say, though, the reality is that the legal title does not reflect the true position because your children are the real owners of the bungalow (assuming they provided all of the purchase monies).

Where the legal ownership is in one person’s name (you) but someone else (your children) enjoys the benefits of ownership such as the proceeds of sale this is called ‘beneficial’ ownership.

In these circumstances the entire value of the bungalow ought not to be taken into account in any financial assessment.

Ben Tyer: As you are the sole legal owner of the bungalow it will be included in any assessment of your financial means to pay for care

But unfortunately you have said there is no formal legal arrangement proving your children’s interest. 

Producing bank statements about the origins of the purchase monies may simply be treated by the local authority as gifts to you from your children, so it will likely still be included in any financial assessment.

What you and your children may have wanted is a legal declaration about the actual bungalow ownership.

Typically this is recorded in a trust deed which sets out that despite you being the legal owner of the bungalow your children, having provided the purchase monies, are in fact the underlying joint owners.

This arrangement is usually also reflected on the ‘title deeds’.

Although the purchase has already occurred it may still be possible to put this arrangement in place.

Given this will be ‘after the event’ I recommend retaining bank statements and evidence of the source of the purchase monies and ideally storing these with the trust deed.

This is because in the event you need local authority financial support for care, the belated change/clarification in ownership via the trust arrangement may be treated as being a gift of the bungalow to your children and an attempt to rid yourself of an asset so that you do not have to pay for care.

This is otherwise known as deliberate deprivation of assets, the possible result of which is that you will be treated as still owning the bungalow in spite of the trust and charged full price accordingly.

Meanwhile, you should check the rules at your retirement development carefully, because it may well be there is no age limit for buying the properties there, just living in them.

In any event, it seems improbable that what I have proposed would not be allowed by the development as that would logically be limiting the properties to those who have sufficient cash reserves to purchase the properties.

It would be sensible to get legal advice, and you could discuss these issues with the lawyer who handled the purchase of your property or use the Law Society’s search tool to find another one.