Planning for future care needs can be complex, especially when property ownership is involved. If you own a home in England or Wales, you might be wondering how different types of property ownership affect your potential liability for care home fees. Perhaps you’ve heard conflicting advice about joint tenants versus tenants in common, or you’re unsure how local authorities assess property during means testing. The good news is that understanding the relationship between property ownership and care fees doesn’t have to be complicated. Many property owners worry about whether holding their property as joint tenants or tenants in common will impact their care fee contributions, but the reality is often much simpler. Property ownership types in England and Wales Property can be owned in two primary ways in England and Wales Joint tenants: When you own property as joint tenants, you and your co-owner(s) have equal rights to the entire property. A key feature of joint tenancy is the ‘right of survivorship’ – when one owner dies, their share automatically passes to the surviving owner(s), regardless of what their Will says. Tenants in common: As tenants in common, each owner holds a specific share of the property, which can be equal or unequal. Unlike joint tenancy, these shares don’t automatically pass to the surviving owner(s) upon death. They can be left to anyone through your Will. The difference between the two is critical for inheritance planning but is less significant when it comes to care fees. It is important to note that tenants in common only relates to ‘beneficial ownership’ (the beneficial owner is person(s) entitled to the benefit of the land). Whereas the Legal Title to property is always held as joint tenants. This means that even if a tenant in common dies and their share passes to someone else under their Will, the Legal Title will be held by the surviving co-owner(s). It is sometimes recommended to think the beneficial ownership as the money you get from the sale -money can be divided into equal or unequal shares (beneficial ownership), unlike the legal ownership (the people who are allowed to sell it and sign the contract of sale) which cannot be divided. How is your property valued for care home fees? When you need residential or home care, your local council conducts a financial assessment (means test) to determine your contribution to care costs. The means test evaluates the individual’s share of the property, not the method of ownership and the assessment considers the following: Your income Your savings Your capital assets, including property Your property won’t be included in the means test if: Your spouse or civil partner continues living there A dependent (such as a disabled relative or child) lives in the property Your care arrangement is temporary, and you plan to return home Importantly, these exemptions apply regardless of whether you own the property as joint tenants or tenants in common. What happens when one partner needs care? When one partner needs care, the financial assessment only considers that individual’s assets, not the couple’s combined wealth. For jointly owned property, the assessment focuses on the individual’s share, regardless of the ownership structure. Can you protect your property from care fees? Some people consider changing their property ownership to protect assets from care fees. While this is possible, if you are considering this option, it is crucial to seek professional legal advice. This can help you understand your options, create effective estate planning strategies and set up appropriate trusts. Trusts can be very useful, but they are complicated and require detailed advice at the creation of your Wills, and at the time of death, so seeking expert legal advice is strongly recommended. It is also important to bear in mind that local authorities have powers to investigate cases where they suspect someone has deliberately reduced their assets to avoid care fees. This includes transferring property ownership, changing from joint tenants to tenants in common and/or making large gifts or transfers of wealth. All of these could be scrutinised by your local authority, so it is important to seek legal advice before making any changes to your assets. Conclusion Ultimately, the distinction between joint tenants and tenants in common has minimal impact on care fee assessments in England and Wales. What matters most, is your share of the property’s value, whether any exemptions apply and the timing and intention behind any property ownership changes. Rather than focusing solely on property ownership structures, consider seeking comprehensive financial and legal advice as this can help you develop effective care fee planning strategies, create appropriate trust arrangements, ensure your estate planning meets your objectives and help you to avoid potential issues with local authorities. While it is natural to want to protect your assets, any planning should be done well in advance of needing care and with proper professional guidance to ensure it’s both legal and effective. How can Morr & Co help? If you have any questions or would like any further information on the content of this article, please do not hesitate to contact our Private Client team by emailing info@morrlaw.com or calling us on 01737 854 500. Disclaimer Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position. Authored by Jessica Williams Associate Solicitor Message Tags Insights On this page Related Stories Insights Perspectives Your guide to Estate Administration Insights What is a Trust? Key benefits and uses in estate planning View more Contact our team today to find out more Contact us
