As our population ages more people require residential care. If at some point in the future you need the help a residential care home offers, current rules mean it is very likely you will have to pay all the fees if you have assets with a value of more than £23,250. When your assets fall below £23,250 the Local Authority may start to contribute towards your care costs. However, you will be expected to continue to make contributions from both your capital and income (provided this leaves you with a certain amount which you are allowed to retain) until your capital reaches £14,250. After that you may only be required to make contributions from your income.
If your stay in care becomes permanent, the value of your house is taken into account in your financial assessment unless it is occupied by your spouse or partner, a dependent child or a relative who is over 60, disabled or incapacitated. The Local Authority have discretion to disregard the value of your house in other circumstances, but this discretion is rarely used.
Rather than sell your house to fund your care, provided you meet the eligibility criteria, you can take out a Deferred Payment Agreement with the Local Authority. This is essentially a loan (with interest) that is repayable if the house is sold during your lifetime or on your death.
You may have seen advertisements which promote putting your house in trust to protect against care home fees. These are sometimes called Family Protection or Asset Protection Trusts. There are tax and other considerations which often mean these trusts are inadvisable. For example, they are expensive to set up (often thousands of pounds) and under new rules they will soon need to be registered with HMRC. Putting your home in trust in this way could fall foul of rules about Deliberate Deprivation of Assets, under which the Local Authority can treat you as owning an asset even if you have given it away provided they can show that one of your motives was to avoid the need to pay care home fees.
If you co-own your home with another person, there are steps you can take within your Will to protect some of its value. As solicitors who specialise in this area of law, we advise our clients on these topics regularly. If you have any concerns or questions and want to discuss your options then do please get in touch.