What happens to a jointly owned property if one owner goes into care in the UK?

With the average cost of a UK care home place often exceeding £30,000 per year, many families worry about the financial implications. Understanding what happens to a jointly owned property if one owner goes into care in the UK is a critical part of later life financial planning.

Quick Summary

When one joint property owner in the UK moves into a care home, a financial assessment is triggered, but the home's value is often disregarded if a partner or certain relatives still live there. Crucially, the outcome depends on the type of joint ownership (joint tenants vs. tenants in common) and the timing of any changes made to ownership.

Key Points

• Financial Assessment is Individual: A local authority assesses only the assets of the person going into care, not their partner's, unless certain joint assets are involved.

• Home Disregarded with Resident Partner: The value of a home is disregarded in the care fee means test if a spouse or civil partner continues to live there.

• Joint Tenancy vs. Tenancy in Common: Ownership type is critical. Joint tenants automatically pass their share to the survivor; tenants in common can leave their share in a Will.

• Deprivation of Assets is Investigated: Transferring a property with the sole intention of avoiding care fees can be challenged by the local authority, with no time limit.

• Strategic Planning is Key: Severing a joint tenancy to create a tenancy in common and using a protective property trust in a Will is a key strategy for asset protection.

• Deferred Payment Agreements: These arrangements allow care fees to be repaid from the value of the property after it is eventually sold, deferring the cost.

The Local Authority Financial Assessment

When a person requires long-term residential care, the local authority conducts a financial means test to determine how much, if anything, they must contribute towards their care fees. This assessment considers the individual's capital and income. In England, the current capital threshold is £23,250. If an individual's savings and investments exceed this amount, they are deemed a 'self-funder' and must cover their own care costs until their capital falls below the threshold.

However, a jointly owned property can be treated differently depending on the circumstances, and its value is not always included in the assessment. The key is whether a 'mandatory disregard' applies, which happens if a qualifying person still lives in the home. The most common scenario is when a spouse or civil partner remains in the property. Other qualifying persons include a relative over 60 or a dependent under 18. This disregard can offer significant protection to the family home while the resident is in care, but it does not apply indefinitely in all situations or if the resident plans to be in care permanently.

How Your Share is Valued

If the mandatory disregard does not apply, the local authority will assess the value of the individual's beneficial interest in the property. This is their share of the property's value. The valuation must reflect the current market value of that beneficial interest, considering that the property is jointly owned and the co-owner remains in residence. It is often argued that a half-share of a property where someone else still lives has a greatly reduced, and sometimes negligible, market value. This is a complex area, and specialist legal advice is highly recommended.

The Difference Between Joint Tenants and Tenants in Common

How a property is owned is a crucial factor that determines what happens to a jointly owned property if one owner goes into care in the UK.

Joint Tenancy

• Right of Survivorship: As joint tenants, you and your co-owner(s) are treated as owning the property as a single entity. If one owner dies, their share automatically passes to the surviving owner(s), regardless of any Will. You cannot leave your share to someone else in a Will.
• Care Fees Impact: If the non-cared-for partner dies first, the entire property passes to the partner in care. The property's full value could then be included in any future financial assessment, potentially forcing a sale to pay for care fees.

Tenancy in Common

• Defined Shares: As tenants in common, each owner holds a distinct, separate share of the property, which can be left to anyone in their Will. Shares can be equal (e.g., 50/50) or unequal.
• Care Fees Impact: This ownership structure, often used with a 'Protective Property Trust', allows one partner's share to be protected for beneficiaries (e.g., children) upon their death. This can ring-fence a significant portion of the property's value from being included in the surviving partner's later financial assessment for care fees.

Comparison Table: Joint Tenancy vs. Tenants in Common

Feature	Joint Tenancy	Tenancy in Common
Ownership	One single, indivisible entity.	Separate, distinct shares (e.g., 50/50).
Inheritance	Share automatically passes to surviving owner(s) (Right of Survivorship).	Share is passed on via a Will to chosen beneficiaries.
Estate Planning	Not flexible. Cannot leave your share to others.	High flexibility. Share can be protected in a Will Trust.
Care Fees Risk	The full property could be assessed if the non-cared-for partner dies first.	At least one partner's share can be protected from assessment after the first death.

The Dangers of 'Deprivation of Assets'

Local authorities have powers to investigate if a person has deliberately reduced their assets to avoid paying for care fees. This is called 'deliberate deprivation of assets'. This is not a time-limited rule, and authorities can look back several years. Examples include gifting the property to a relative or changing ownership structures with the primary intention of avoiding care costs shortly before needing care. If proven, the local authority can treat the person as if they still own the asset and bill them accordingly, which can lead to significant financial distress for all parties involved.

Strategies and Planning Options

Forward planning is key to mitigating the impact of care costs on a jointly owned property.

1. Severing a Joint Tenancy: Couples who own their property as joint tenants can change the ownership to tenants in common. This is a relatively simple process involving a formal notice of severance. It allows each partner to leave their share to a named beneficiary, usually via a Protective Property Trust in their Will.

2. Using a Life Interest Trust: This is a type of Will Trust that can be set up once the property is owned as tenants in common. The trust allows the surviving partner to live in the property for the rest of their life, but the deceased's share is held in trust for other beneficiaries. This means only the survivor's share can be included in a financial assessment for care fees.

3. Deferred Payment Agreements: If the property is not disregarded, a local authority may offer a deferred payment agreement. This allows the care fees to be paid back from the sale of the property after the resident's death, or at a later date. This is an option to explore if the other owner wishes to stay in the property but cannot afford the fees.

4. Lasting Power of Attorney (LPA): Having an LPA in place for property and financial affairs allows a trusted person to make decisions on behalf of an owner who has lost mental capacity. This is vital for managing finances and making decisions related to the property.

What Happens After One Partner Dies?

The death of a joint owner has different consequences depending on the ownership structure. As discussed, with a joint tenancy, the property passes automatically to the surviving partner. If the surviving partner later needs care, the property's full value is assessed. With a tenancy in common and a Protective Property Trust in place via the Will, the deceased's share is protected for beneficiaries. This means only the surviving partner's half is assessed for care fees, potentially saving a significant amount of the family wealth.

Seeking Professional Advice

Navigating the rules surrounding jointly owned property and care fees is complex. Early and specialist advice from legal and financial professionals is crucial. An expert can help you understand the implications of your ownership structure, explore appropriate estate planning options, and ensure any actions taken are not interpreted as a 'deliberate deprivation of assets'. You can find qualified and regulated legal support through official bodies and directories.

For more detailed information on paying for care, you can refer to authoritative sources such as the guidance provided by the UK Government or charitable organisations such as Age UK.

Conclusion

When one owner of a jointly owned property in the UK moves into care, the outcome depends on the local authority's financial assessment, the type of ownership, and whether any mandatory disregards apply. While the property may be disregarded initially if a partner remains, failing to plan can leave the asset exposed to care fees later on. Taking steps like severing a joint tenancy and using a Will with a Life Interest Trust can be effective strategies for protecting a portion of the property's value. Proactive planning well in advance of any care needs is the safest way to secure your assets and ensure your wishes for your inheritance are respected.

Frequently Asked Questions

Does owning a property jointly with my partner protect it from care home fees?

Not automatically. If a spouse or partner remains living in the property, its value will be disregarded during the financial assessment. However, if that partner later needs care themselves, the property's value could then be included in their own assessment, depending on the ownership structure and any trusts in place.

What is the difference between joint tenants and tenants in common for care fees?

As joint tenants, your share automatically passes to the surviving owner upon death. If the survivor later enters care, the property's full value is assessed. As tenants in common, each owner holds a defined share that can be left in a Will, often in a trust, which can protect that share from being included in a later care fees assessment.

Can I simply gift my share of the property to my children to avoid care fees?

Gifting property to avoid care fees is highly risky. Local authorities have the power to investigate and deem this a 'deliberate deprivation of assets.' If they prove this was your intention, they can still assess you as if you owned the property, potentially forcing your children to repay the cost.

Will a local authority force the sale of a jointly owned property to pay for care?

If there is a mandatory disregard because a spouse or qualifying relative lives in the home, a local authority cannot force a sale. If no disregard applies, the authority will assess the market value of the individual's share, which is often very low, making a forced sale to an outside party unlikely. However, they may pursue a deferred payment agreement.

How does a Deferred Payment Agreement work for a jointly owned property?

A deferred payment agreement is a loan from the local authority using the property as security. It allows care fees to be paid after the owner's death or when the property is eventually sold. The remaining owner can continue to live there, and the loan is settled from the estate.

Is it too late to change from joint tenants to tenants in common once one owner is in care?

It is generally not too late, assuming both owners still have the mental capacity to make this change. However, if the local authority suspects the change was made purely to avoid care costs, it could be challenged as a deliberate deprivation of assets. It is always better to plan well in advance.

What is a Protective Property Trust and how can it help with care fees?

A Protective Property Trust is a Will Trust used by couples who own their home as tenants in common. It protects the deceased's share of the property from being included in the surviving partner's financial assessment for care, ensuring at least half of the property's value is preserved for beneficiaries.