Can I Avoid Paying Care Home Fees?
Can I Avoid Paying Care Home Fees?
At some point in your life, you will start thinking about who is going to look after you in your older years, i.e. the need for care. With this comes the impact of the cost of a care home and whether the very roof over your head could be taken away, or your children not benefiting from your assets. So, what can you do to protect your assets from care home fees?
The law states that if you have assets (including savings and property) of less than £14,250.00 you will not have to pay for care home fees. From October 2023 this figure will increase to £20,000.00.
If your assets (including the value of your home) are over £23,250.00 you will have to pay care home fees if you go into care.
The Government has announced that from October 2023 this threshold will also rise. It will increase to £86,000.00.
Care Home Fees
With the average cost of a residential care home in the UK at £704 per week, and the average cost of a nursing home is £888 per week, it’s not long before any assets can quickly disappear
Your Home
For most people their home is their most valuable asset and according to the Office of National Statistics (UK House Price Index) the average UK house price was £274,000 in January 2022, £24,000 higher than this time last year. It is unlikely therefore that the increase in the cap to £86,000.00 due to come in at the end of next year will offer much comfort.
Deprivation of assets
People often consider transferring or signing over the house to their children however there is no guarantee that this will have the desired effect of protecting your home against care home fees.
The local authority is likely to consider this as a deprivation of assets and hence will include the value of the property in their financial assessment.
Severing the Joint Tenancy
In the case of married couples or civil partners the house is usually owned as ‘joint tenants.’ This means that each spouse/civil partner owns the property jointly and severally, so that on the first death the survivor will inherit the entire property. This is known as the ‘right of survivorship’ and operates automatically outside the terms of a Will.
In this situation if you have to go into a care home the local authority will take into account the whole of the value of the house which is above the threshold.
However, you could consider severing the joint tenancy so that you each own a separate and distinct share of the property (usually 50%). You would then become tenants in common rather than joint tenants.
The idea is that the local authority would then only be able take the value of your share of the property into account when assessing your means to pay care home fees.
Care Home Fees: Protecting Your Assets in Your Will
If you sever the joint tenancy, you should update your Will to include a Will Trust so that your spouse remain living in the property.
To learn more about drafting your will, visit our page here.
Asset Protection Trusts (APT’s)
APT’s are often promoted as being an effective tool for protecting your assets, however they are usually very expensive to set up and maintain. Unfortunately, again, there is no guarantee that the local authority would not regard asset protection trusts as a deprivation of assets.
Insurance
You may be able to take out insurance to cover the costs if you need to pay for long term care. However, you may wish to consider taking independent financial advice as the degree of cover and the cost of premiums are likely to vary considerably.
Contact us on 01925 937070 or email dianemassey@dsmlegal.co.uk for further information or a free 30 minute consultation.
