Many of our clients are concerned about what happens to the costs incurred if they have to go into a care home.
While the answer is not black and white, we will do our best to get you some necessary information about what this means for you and your family.
Current Care Fee Rules
Under current law, if you have capital in excess of £23,250, you are to cover the price of any care charges until the cost of said charges reduces your capital to below this amount.
Capital counts as properly, stocks, shares, your savings, premium bonds, and any other financial assets held by you.
Your home’s value is NOT included in the care charge assessment so long as your spouse or other relatives are occupying it.
What NOT to Do
Many have seen Family Protection Trusts being peddled as the answer to this issue. These will not guarantee avoidance of care charges. Preparing these sorts of trusts can cost thousands of pounds. Some of these have you putting your house into a Family Protection Trust, which is, in essence, a disposal of an asset.
It may come back to bite you as a financial authority can look back, see the transfer of the asset, and view it as you seek to avoid incurring care charges, thus disregarding your transfer. The fees for care would be assessed accordingly.
Information About Liferent and Fee Arrangements
A liferent and fee arrangement is one way of transferring your property. The capital element of said property would be transferred to your kids, and you hold a right to occupy the property, the liferent.
So how does it work? A few conditions must be met:
- You must be able to justify the transfer of the property to your children on a basis other than simply to avoid care fees
- The reason must be legitimate and documented legally at the time
- The longer the time from you transferring the house to your children and THEN going into care, the better- this boosts your chances of avoiding care fees.
Some people have approached us saying that 7 years is a “magic number” and that if they transfer the home 7 years before they go into care, the local authorities will disregard that property.
It is not true, as this applies only to gifts relating to the inheritance tax. There are no time limits on local authorities examining your property transfer.
There is one option which we think may have the best chance of helping to avoid care home charges.
Most of the time, couples own their home together, and if one spouse dies, there is a survivorship designation that states one spouse will own the home entirely upon the death of their partner.
One option is to remove the designation from your title and rewrite the will so that the shares in the property are instead left to your children subject to a right of liferent, which favors your spouse.
Your spouse would still retain the right to live there. The risk of local authority forcing a sale is lowered because you are transferring the property as a result of will implementation.
We hope this has been helpful in answering a few care home fee questions. Speak with your solicitor in order to get answers to your specific questions.