Money Helpdesk: How to avoid savings being eaten up

WE KNOW we're not as young as we used to be, but we don't like the idea of seeing our savings eaten up in the future by the cost of care.

We would like to still think that it is possible to leave a healthy legacy to our grandchildren. What do we do?

AD, Edinburgh

Lianne Lodge, a solicitor with Pagan Osborne, writes:

You are not alone in your concerns. Many consider gifting property and other assets to avoid them being used to fund care. Unfortunately, it is likely that even then, these "gifts" would still count as being your assets when determining the level of care home fees.

One thing you can do is leave some or all of the joint estate up to the value of the nil rate band for inheritance tax (currently 325,000) on the first death in a discretionary trust, rather than to one other. You can ring-fence those assets for the surviving spouse and the family.

The trustees, whom you appoint, would then have complete discretion to allow beneficiaries (including the surviving spouse) to live in the home or get income from the assets.

Because there is such discretion, the surviving spouse would not be deemed to own the assets in the trust so these could not be taken into account in relation to care home fees. You need to check title deeds to ensure that the above trust is possible.