You may need to consider future care home costs as they can readily exceed £1000 per week and your ability to pay will be determined by a means test called Care Needs Assessment.
Who pays for care home costs?
The average cost for a care home is £33,853 p.a. in England and Wales with nursing home fees averaging £47,320 p.a. Paying for care whilst remaining in the family home can also be extremely expensive. An individual’s entire life savings can be spent on care, often with the family home being sold to meet the costs.
However, if an individual’s primary need for care is a health need, the full cost of their care should be paid by the NHS via funding called Continuing Healthcare Funding (CHC funding). This is free, not means tested and can cover up to 100% of care costs.
If an individual’s need for care is due to decreasing mental capacity and simple old age however, paying for the cost of care will depend on a valuation of a person’s assets. In England and Northern Ireland the savings threshold, including the value of any property, is £23,250, In Wales, £24,000 and in Scotland £27,250.
If your assets exceed the threshold, you will be classified as a self-funder and expected to pay your fees in full from your own income, savings account or property’s value. However, even if you are found to be over the threshold and need to self-fund, you might be eligible for other forms of financial help. For example:
Personal Independence Allowance
Carer’s Allowance if you have a carer
Deliberate deprivation of assets is when you try to decrease the total valuation of your wealth so that you don’t have to self-fund the care you need. There is no limit to how far back the local authority can look to work out whether any care home fee avoidance has place. If the council concludes that you intentionally reduced your income, property or savings, then they might calculate how much you need to put towards the cost of your care home as if you still had the money you spent or gave away.
Giving away money or assets will not always be considered deliberate deprivation if you could not reasonably have known that you would soon need care. Some reasons you may be giving gifts are:
Helping loved ones who are struggling financially
You are still in good health and want to go on a well-deserved holiday in retirement
You would like to see your children or grandchildren enjoy a gift of tax-free money
How to avoid selling your house to pay for care
It is understandable that you might want to search for options and advice about how to protect assets, such as the house you live in, when it comes to paying for care in the future. There are several options on offer that a person could consider. For example: Trusts, equity release and deferred payment agreements are all things that people have done while they still enjoy good health.
Can I protect my home from care costs?
You can retain ownership of a property while funding the cost of care through equity release. This allows you to access some of the value of your home without having to sell it.
What are deferred payment schemes?
A deferred payment agreement is a loan provided by your local council to help towards the cost of care. A loan is secured against your home and will usually have a fixed interest rate. It retains home ownership and delays payment of care home fees until after your death.
It is also worth knowing that you can usually rent out your home and put that income towards the cost of your care.
Can putting a house in Trust avoid its value being assessed for self-funding?
Some people may consider putting their home into a Trust. If you do this you will no longer own it, and you can’t take it back.
Putting a home into a Trust to avoid paying care fees will be classed as deliberate deprivation of assets. If the council suspect that you could have known at the time of setting up a Trust that you would soon have to pay the cost of nursing or care home services, then you will not gain any benefit. You must have other legitimate reasons for putting a property into Trust and do so while you are fit and healthy.
The most common kind of Trust is known as a Protective Property Trust. This type of Trust lets you ring-fence a percentage of the property for your loved ones to inherit after your death. They also go by the name of Property Trust Wills. For further information see our guide Property Trusts.
How do I protect my assets from nursing home expenses?
Hiding money from social services to avoid paying for care is against the law. Local government has cracked down on those intentionally using Trusts to gift their property to their family to avoid fees. However, if you pass assets to Trustees such as children or a partner while still healthy and are not expecting to pay for nursing care in the near future, then there are routes such as a Protective Property Trust that could be used.
Consider a legal professional or a solicitor
to arrange a Property Protective Trust.