My wife and I are worried about losing our £250,000 home to fund care costs. Can we sell 49% to children for £1?

My wife and I are 56 years old and in good health. Our house is worth around £250,000 and has no mortgage.

I was wondering if selling my children 49 percent of the house would be a good way to ensure they get something out of the property in the future.

Assuming that my wife or I will need self-funded care in the future, I am looking at how to protect her interests by providing my wife or I with only 51 percent of the value of the property in the event that the house needs to be sold to fund care.

I suspect he would need some sort of help from a solicitor to draw up the contracts and would sell them his share for £1 each. CT by email

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This is Money’s Harvey Dorset responds: Many people will have to deal with care later in their lives, and the vast majority of them will have to self-fund it.

Currently, the upper capital limit for council care funding is just £23,250, meaning if you own a property you will almost certainly overcome this barrier.

To pay for care, you may have to use the equity in your home, depending on what other assets you have.

If you or your wife stay in the family home while the other is in care, the good news is that your home will not be sold to pay for care costs. Instead, these will be claimed by the council when selling the house after your death.

However, this will also not provide an inheritance for your children.

As discussed below, there are several trusts that could help you pass some of your wealth to your children. However, it is essential that they are set up correctly to ensure that you do not run into legal problems.

The fact that they are both 56 could help here, as ensuring some of the property is left in trust long before it needs care will mean it is outside the seven years considered under gift rules.

If you need care within seven years of transferring assets to a trust, then it could be considered a deliberate deprivation of assets.

This is Money spoke to two financial advisors to find out what you can do to ensure your children receive an inheritance in the future.

Billy Ambler, independent financial planner at Flying Colors, responds: The question you have asked is potentially complex – you would need a competent lawyer working in this particular field to investigate this for you and advise you on the best way to proceed.

If you were to sell 49 percent of the property to your children, there are quite a few things to consider.

One is the problem of selling a property below market value and the possible taxes that may arise in this regard.

Also a concern is maintaining the profit on the property and the possibility of having to pay market rent as a result.

There may be stamp duty increases in the future, plus affordability implications for your children on other potential property purchases; All of this needs to be thought through carefully.

However, from a financial planning standpoint, there is a simpler solution to protect your children’s interests and ensure that your estate cannot be sold to fund future care.

By using a discretionary living trust with a tenant in a joint arrangement, you and your wife would continue to own the property together, and each of you would have a different share or percentage of ownership.

You would retain the property, so you would not have to pay rent on the property for the trust to be maintained.

Assuming you and your wife each own 50 percent of the property, then 50 percent would pass to your beneficiaries (your children) upon the first death, and the remaining 50 percent would remain the property of the surviving spouse.

Due to the legalities around this type of trust structure, the local authority would not be able to force the sale of the property to pay for the care.

Upon the death of the second tenant in common (the surviving spouse), the entire value of the house would belong to their children within the trust.

This type of trust also establishes how assets will be divided once you both pass away, whether equally shared between your children or not. It ensures that your wishes are fulfilled and provides clarity for your children.

However, you will need to ensure that the trust can be easily undone once you are both deceased.

Your children would also need to be aware of potential capital gains tax (CGT) liabilities if they kept the house and then sold it in the future for significantly more than it was worth at the time of your death.

My advice would be to ensure this is drafted correctly along with an up-to-date will, and this should be done by professionals who are familiar with this type of arrangement.

Kev Burns, Chartered Financial Planner at HFMC Wealth and @the_moneypt on Instagram, responds: First of all, congratulations on taking the first steps to shape your financial future.

This is often where many people stumble, so it’s encouraging to see him thinking ahead.

Step 1: Identify what matters most to you about money right now

Before diving into potential solutions, it’s essential to ask yourself: What is most important about money right now?

Is it about ensuring that you and your spouse have sufficient funds for potential self-funded care?

Or are you leaving a significant inheritance for your children?

Maybe it’s a completely different priority.

Taking the time to define what matters most will guide all of your future financial decisions.

Step 2: Set your goals and prioritize them

Once you’ve identified what’s important, the next step is to set specific goals and prioritize them. This is essential because some priorities can conflict.

For example, if self-funded care takes priority over leaving a legacy, selling a portion of your property to your children now may not be the best course of action.

Step 3: Attach Monetary Values ​​to Your Goals

Quantifying your goals helps bring clarity and structure to your plan. For example:

If care costs average £60,000 per year and you estimate you will need care for 2-3 years, you may need around £240,000, adjusted for inflation.

Evaluating your current financial situation is essential here. If your wealth is primarily invested in property, accessing those funds when needed can present challenges. After all, you can’t just sell a bathroom if you need £60,000.

If your main asset is your home, these are the key options to consider:

Sell ​​your property

Selling your home can unlock equity, but it also comes with significant drawbacks:

You may need to move while you are suffering from health problems.

The costs associated with buying and selling, such as legal fees and moving expenses, can add up quickly.

If your children co-own the property, they could face capital gains taxes on their share, which would reduce the available equity.

Capital release (lifetime mortgage)

Equity release allows homeowners aged 55 and over to borrow against their property, with repayment deferred until you die or enter a long-term care facility. However:

If your children are legal co-owners of the home and are under age 55, this option will not be available.

Under current rules, you will only need to fully self-fund care if your available capital exceeds £23,250. This calculation is likely to take into account the value of your home.

A property trust can safeguard some of the value of your property, ensuring that some of it is passed on to your beneficiaries while also providing a safety net for care costs.

The most important aspect of financial planning is maintaining flexibility and freedom. Your current priorities may change over time, so it is vital to avoid decisions that could limit your options in the future.

The cornerstone of a successful financial strategy is a goals-based lifestyle plan, reviewed annually to ensure your goals and strategies remain aligned.

A highly qualified financial planner and other professionals can guide you through this process, helping you identify your goals, explore your options, and create a plan that adapts as your circumstances evolve.

Taking this step ensures that your financial future is secure, flexible, and aligned with your priorities.