Care Fee Planning

An elderly couple eating breakfast in bed

How do I stop my home from being sold to pay for care fees?

Current Rules And Regulations

Most couples are not aware that should one or both of them need to be taken into a care home, the Local Authority will look at the couple’s assets to see whether the assets can pay for a care home or whether they have to step in and pay a contribution to the home’s fees.

When a financial assessment is carried out by the Local Authority (LA), the assets would have to be valued at less than £14,250 before the LA will contribute.

The majority of people have assets (house, saleable assets like cars, savings etc) far in excess of £14,250 and without careful planning the assets would have to be sold to fund any care home fees.

Its not uncommon for couples to believe that they can leave their home as inheritance for their family. Ensuring that the property is owned as “tenants in common” prevents the sale of the house should the first person go into care. The LA cannot demand the sale of a house as the person in care only owns half of the property. However, following the death of one of them, the surviving spouse becomes the legal owner of 100% of the property and should they then be taken into a care home the house must be sold to pay the care fees. It doesn’t take long for a house valued at £120,000 to be swallowed up by care fees which cost an average of £900 per week. The funds from the property will be used until the balance reaches £14,250.

One particular case we dealt with, a client had left the whole of his estate to his wife in his will, and subsequently, she went into care. The original value of the estate that the wife inherited was £280,000, which consisted of the property that they owned together, along with bank accounts and savings etc. She ended up in care for 4 years at a cost of £46,800 per year, and when we came to deal with the estate, the two children received £92,800 between the two of them rather than the £280,000 that their parents had hoped they would leave to them.

 

To find out more call us on 01422 658 008 or use the form below to email us.

What Can You Do About It?

We have many clients who approach JH Wills wanting to sign their property over to their children, with the aim of preventing the house from being taken into account if the Local Authority was to later carry out a financial assessment.

Unfortunately, this is not the correct way in which we would recommend planning for care fees. The Local Authority have an unlimited amount of time to look back at what assets that individual had at the point of requiring care. If the Local Authority is of the view that the person who is going into care has ‘deliberately deprived’ themselves by giving the property away, they can seek to have the person who received the asset pay for the care.

Not only does the outright transfer not work for care fees,  it is a high-risk step to take. The property would no longer be owned by you and as such, you could be told to leave the property, or the property could be taken into account if your children were to divorce later in life or were struggling with financial difficulties.

 

This type of planning is certainly not something we would recommend. We recommend changing the way in which you own your property from a joint tenancy to a tenancy-in-common and leave the property on trust for the surviving spouse instead of gifting the entire estate to one another. It is important that couples act now as this isn’t something that can be done when one party dies or perhaps has suffered a stroke, as they will not be in a position to give us instructions.

Other than care fee planning, our clients have used this type of planning to prevent their children from losing out later in life if their spouse was to remarry.

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