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 invested that money in a place where I can live.

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

I’m really worried that they will lose such a huge amount.

Tanya Jefferies, of This is Money, replies: Your children have generously assisted you in buying a suitable house for your old age.

It is understandable that you do not want your municipality to include its contribution in the financial assessment of your equity if you need care in the future.

But as things stand now, it sounds like your bungalow is only in your name, because the pension accrual you moved to only allows people over a certain age to live there.

However, it may not have an age limit for ownership, only residence – you should double check.

We asked a lawyer experienced in social care cases to explain your options for protecting your children’s best interests in your property.

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

However, you say that the reality is that the legal title does not reflect the true position as your children are the real owners of the bungalow (assuming they have already provided the purchase amount).

When legal ownership is in the name of one person (you), but someone else (your children) enjoys the benefits of ownership, such as the proceeds from the sale, it is called “useful” property.

In these circumstances, the total value of the bungalow should not be taken into account in any financial assessment.

Ben Tyer: Since you are the sole legal owner of the bungalow, it is factored into any assessment of your financial resources to pay for the care

But unfortunately you said that there is no formal legal regulation that demonstrates the best interests of your children.

Making bank statements on the origin of the purchase money may simply be considered a gift from your children to you by the local government, so it will likely still be factored into any financial assessment.

What you and your children may have wanted is a legal statement on actual bungalow ownership.

This is usually recorded in a trust deed which states that although you are the legal owner of the bungalow, your children, who provided the purchase price, are in fact the underlying co-owners.

This arrangement can usually also be found on the ‘title deeds’.

Although the purchase has already taken place, it may still be possible to make this arrangement.

As this will be ‘post-event’ I recommend keeping bank statements and evidence of the source of the purchase money and ideally keep it with the trust deed.

This is because in the event that you need financial support from the council for care, the late change/clearance of ownership through the trust settlement can be seen as a gift from the bungalow to your children and an attempt to rid yourself of a property so you don’t have to worry about paying.

This is also known as intentional asset deprivation, with the possible result that despite the trust you will be treated as if you still own the bungalow and charged the full price accordingly.

In the meantime, you should carefully check the rules for your pension development, because there may well be no age limit for buying the homes there, but simply living in them.

In any case, it seems unlikely that what I have suggested would not be allowed by the development, as that would logically limit the properties to those who have sufficient cash reserves to buy the properties.

It would be wise to seek legal advice, and you can discuss these issues with the attorney who handled the purchase of your property or use the Law Society’s search function to find another.