The issue of paying for care fees is becoming an increasing problem with a significantly ageing population. This situation is only likely to be exacerbated in the future. Nick Rhodes at Blacks Solicitors LLP tells us what we need to know.
- Currently, if you have been assessed as needing to live in a care home and your capital (the value of your savings and property) is above £23,250, then you must pay for your care fees in full
- If you have less than £14,250 then the local authority should pay for your care fees in full – but you may not get your choice of home
- If you have savings of between £14,250 to £23,250 then you will have to pay some of your care fees and the local authority will then pay the remaining balance
- If your partner is still living in your home, the value of your share of the house (usually 50/50 if you are married or in a civil partnership) will be taken into account, so the vast majority of home owners will be liable to pay for their care-home fees
- However, the value of the property is disregarded for the first 12 weeks of care, so there may be a situation in which someone with savings of less than £23,250 (but who owns a house) has their fees paid-for initially, but must then fund themselves after this 12-week period has come to an end.
In any of the above circumstances, on the face of it you are free to choose whichever care home you wish so long as it provides the services for which you need.
However, if you are not self funding you may have to live in a care home which the local authority deems suitable. If you wish to live elsewhere - and this is more expensive - then a third party such as a family member may have to cover the extra cost.
Do I need to sell my home?
Many people ask if they will have to sell their home to meet the cost of care fees. A recent change has meant that the person moving into care can request for payments to be deferred, so that the local authority will instead pay the fees, but will register a charge against that person’s property.
The fees are then repaid at the time the property is sold, whether that is during someone’s lifetime or after they have passed away. Although this may seem attractive to many people, the interest charged can be prohibitive.
Tips for covering the cost
So what could people do regarding payment of care fees?
- Beware of giving it all away It is widely recognised that you are not allowed to "deliberately deprive" yourself of assets to avoid paying care fees. A classic example would be someone giving away all their savings or their property to their children a short time before moving into care, so they fall below the threshold. The local authority would seek to undo such a gift, as it was clearly to avoid care fees
- Make a will The best approach is to have wills in which a married couple or civil partners hold their property as 'tenants in common'. On the first death, the deceased’s will leaves the deceased’s share of the property to a trust, meaning that if the survivor has to move into care, then the survivor should only be assessed on the share of the property which they own, not the entire property. This should help shelter half of the property from care fees. At the moment, this seems to be accepted by the local authorities but it is always subject to review.
Yours Retirement Services helps you make a will and set up power of attorney. Find out more here.