None of us like to think about a future when we may not be able to care for ourselves, but planning for the cost of care can help to protect your assets for your family.
Whose responsibility is it to pay for my care, if I ever need it?
You are responsible for paying for your own care, if you have sufficient assets to do so. No other family member or friend is responsible for paying for your care, unless they choose to assist you with those costs. However, you may be eligible for funding from the local authority towards the cost of your care, if you have less than £28,000 in assets (which includes your savings, investments and any property you own). This threshold is reviewed, and usually increased, annually.
Can my savings be taken and used to pay for my care?
Yes, if you require residential care, the value of your assets will be taken into account to ascertain if you have enough money to pay for your own care. If your assets are over the threshold of £28,000, you will be classed as self-funding and will have to pay for your own care. However, you can decide which savings and assets to use to pay for your care. There may be certain assets which are not taken into account for care costs, such as life assurance.
Is it true that the government can take my home and sell it to pay for my care?
If you own your own home and if no one else lives in your home, then your house may have to be sold to meet the cost of your care. However, there may be other options available. For example, if you can rent out your house to produce an income and if that, together with any other income you receive and your other savings, is enough to meet the cost of your care, then it may not be necessary to sell your house. Alternatively, if your house is your only asset, the local authority may reach an agreement with you whereby your contribution to your care costs is deferred and the local authority will meet the cost until your death. After your death, the amount the local authority paid will have to be repaid to them, either from the sale of your house or from other funds if your beneficiaries have other funds to pay it. This gives your family the option to keep the house, if they wish to do so.
If someone else lives in your property with you, such as a dependent, it may be that the house is disregarded from the assessment of your finances for care costs, meaning the house doesn’t have to be sold and that person can keep living there. This will depend on who the person is and what their own circumstances are.
My partner and I own a home together, if I require residential care, will my partner be forced out of our home in order to pay for my care?
If your partner lives in the property with you and is over the age of 60, your house will automatically be disregarded from the financial assessment for your care costs. If your partner is under 60, your one-half share of the property may still be taken into account for the cost of your care, however it is likely to be assessed as having only a nominal value. This is because there would be little interest on the open market for someone to buy a one-half share of a property. The local authority may agree to allow your partner to buy out your one-half share at a low price.
Can I sign my assets over to a loved one if I discover I need long term care, so the government cannot take them?
If you have made a gift or transfer of assets knowing that you require long term care and with a view to limiting what you pay for your own care, the local authority will deem this a “deprivation of capital”. If a deprivation of capital has occurred the local authority may be able to recover the asset from the person you transferred it to. This will depend on the timing of when you made the transfer compared to when you moved into a care home. This means that if you made the transfer many years before requiring care, the transfer may be safe. However, if you transferred the asset within six months of moving into a care home the local authority will be able to recover the asset. If you have transferred an asset away for a reason other than to protect it from care costs, such as inheritance tax planning, then you may have a defence against the local authority recovering the property.
What is the best way to ensure my home and savings are not used to pay for my care?
The best way to protect some savings and assets for your family is to plan well in advance of requiring care. This may involve making outright gifts to family members or putting assets into trust. The local authorities will generally look back 7 years to see what gifts have been made in that time frame, so gifts made many years prior to requiring care are more likely to be safe. If you have other reasons for making gifts, such as tax planning, these reasons should be recorded, to help demonstrate that your gifts do not fall within the deprivation of capital rules.
Additionally, there may be planning you can do within your wills. For a couple who own their house together, rather than each leaving your one half share of your property to your partner in your will, you may choose to leave it to your children, but allow your partner the right to keep living in the house (this right is known as a “liferent”). This means that if your partner requires residential care after your death, they would only own their one-half share of the property and your one-half share can pass to your children at that stage. As this transfer will only happen on your death, there is no question of any deprivation of capital and this is legitimate cost of care planning.