Avoiding Care Fees

We often get asked if we can help people to avoid care fees, after all, who wants to spend all their money on them and leave nothing for their children and grandchildren after a lifetime’s hard work?

Care fees Assessment

When someone goes into care, the local authority will carry out a financial assessment. As part of their assessment, they will calculate the cost of the care and how much the individual can contribute from their own resources.  They don’t always get it right though. They will consider all of the persons assets and income.

The Care and Support (Charging and Assessment of Resources) Regulations 2014, Schedule 2, Regulation 4 states that “A local authority may disregard the value of any premises which is occupied in whole or in part by a qualifying relative of the adult as their main or only home where the qualifying relative occupied the premises after the date on which the adult was first provided with accommodation in a care home under the Act.” A qualifying relative is defined as a spouse/civil partner, partner, former partner,  the person’s minor child, or a relative who is over 60 or  incapacitated.

If someone has savings of over £23,250 (as at February 2023), they will have to fund the care themselves. This will include their home unless it comes under one of the acceptable exclusions (disregards is the jargon).

If they have savings of between £14,250 and £23,250, they will need to contribute towards the cost of their care from income such as pensions and a tariff based on their capital, but the local authority will fund the rest within their limits – so they will not fund an expensive care home just because you like it more – usually.

Once someone’s capital drops below £14,250, they will no longer pay a ‘tariff’ income based on their capital, but they must continue paying from income included in the means test. The council pay the remaining cost of their care, within their limits – see previous paragraph.

Scenario 1

Richard and Amy are married. Richard falls unwell and needs to move into a care home where he is in the best hands. Is the value of the home considered when the local authority carry out the means test? Would Amy be liable for care home fees and could the local authority put a charge against the home?

The good news here is that if Richard goes into care and Amy continues living in the home, then the value of the home isn’t considered by the local authority when carrying out the means test. This is because, as stated above, the local authority may disregard the value of any premises which is occupied in whole or in part by a qualifying relative of the adult as their main or only home where the qualifying relative occupied the premises after the date on which the adult was first provided with accommodation in a care home under the Act.” As she is his spouse, she falls under the definition of qualifying relative.

Amy would not be liable for care fees as only Richard’s individual’s assets would be considered. The local authority could not put a charge against the home for as long as it is being disregarded in the means test.

Scenario 2

If Richard and Amy both go into care during their lifetime would the home be part of the means test and could it be sold to fund their care?

If they both go into care during their lifetime then the home would no longer be disregarded for care fees unless there was still a relative under 18, over 60, or incapacitated living in it.

This means the value of the home would be considered for their individual means tests and it could also be sold to fund their care if they don’t have enough capital to fund themselves.

Scenario 3

Adrianna owns her home solely with no-one else living with her. Can she protect her home from care fees in the event she needs to go into care during her lifetime by gifting it to her children?

We would not be able to advise on any lifetime planning to protect her property. If she gave her property away to her children or to trust in lifetime and the intention was to avoid paying for care, then this would be classed as deliberate deprivation. In this instance, if the local authority decide that someone has committed deliberate deprivation for the purposes of the financial assessment, they can still treat the person as if they own that asset.

Scenario 4

Richard passes away and he has a Protective Property Trust in his Will so his share of the home passes to the trust. Amy then needs to go into care. Would the home be assessed for care fees and would the home need to be sold to pay for care or a charge placed on it?

Amy would be assessed on her share of the property only and not the share that is in trust since this is protected. If she needs to self-fund but doesn’t have enough capital to cover this without selling the property, the local authority will seek to place a charge on her share of the property to reclaim their fees when the property is sold. This is usually referred to as a deferred payment scheme. (In my mother in laws case, we rented her property out to help towards the cost of fees.)

What can be done by Will to protect the home from care fees?

It is important to note that a Will speaks from death so any provisions in there will take place on death only: however, the type of ownership will be amended from Joint Tenants (where you each own all of the home) to Tenants in Common, where you each own (typically) half.

A life interest trust can protect part of the home from care fees since the deceased’s share of the home has transferred to the trust so will not be counted as part of the means test assessment carried out by the local authority.

New proposals for Adult Social Care.

In February 2023 the government announced proposed changes to adult social care. Currently, before someone can receive publicly funded social care, they are assessed and the value of their assets are taken into account. If an individual has assets above the £23,250 threshold, they must fully fund their own care, rely on friends or family or even go without care.

The proposals put forward by the Government would (allegedly) make the means test more generous so instead of the individual having to pay for all their care in the event their assets are above £23,250, from October 2023, they would only have to fully fund their care if their assets are more than £100,000.

Currently if someone has assets from £14,250, they must contribute towards the cost of their care. This figure will now be £20,000.

There is also set to be a cap on the amount an individual has to pay for care during their lifetime which is set at £86,000. However, this cap would only cover the cost of a care home that an individual’s local authority was willing to pay for (not all care homes). Alternatively, if someone required home care, it would only cover the number of hours their local authority thought was needed and at the price it would be willing to pay. This cap would not include the living expenses in a care home i.e. food.

But Surely a Full Property Trust will avoid Care Fees?

Many lifetime property trusts have been sold as a way of avoiding care fees.  The trouble is the Local Authorities keep copies of the adverts, and can use them as evidence that the Trust was set up with the intention of avoiding care fees. That means that the Trust can be challenged and potentially unwound, so we do not recommend lifetime trusts on this basis, though they have many other advantages. Local Authorities do have the upper hand, as they can simply stop paying the care fees and leave the family to challenge them.

If you have problems in this area, please do get in touch.

This article is a slightly more cynical version of one produced by the Technical Research team at the Society of Will Writers.

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