Finance For Care Homes
Carers Week Shines Focus on Care Homes
This week (13th to 19th June) is national Carers Week, created to raise awareness of the challenges faced by the six million or so carers in the UK. At some point, those who provide care to others must accept that the person for whom they are caring may need to go into a care home, particularly if they are elderly. Here, Helen Honeyball, partner and head of the Private Client Team at Stones Solicitors LLP, looks at the issues.
It is perhaps one of the most difficult decisions to make for another person, but as our population ages it will become a more common dilemma – what do we need to think about before moving someone in our care to a care home?
Recent figures show that the average care home fees are now £25,000 a year, and this is a financial burden that more and more of us will need to face: another study showed that there are 9.5 million people in the UK aged between 65 and 74 years of age, compared with one million aged 85 and more – 20.7 per cent of whom need residential care.
The first question to be asked is whether or not a nursing care assessment has been carried out. This is important, because if the individual in question is found to be entitled to nursing care this element is paid for by the NHS.
If the individual concerned does not qualify for NHS funding (and this is much less widely available than one might think) then anyone with capital exceeding £23,250 must pay for their care home fees. Those with capital between £14,250 and £23,250 will be required to pay for some of the fees. Capital includes residential property (unless it is being occupied by a dependent relative of the individual in care)so if someone is cash poor but comparatively asset rich they will need to consider what, if anything, can be done with those assets.
One option is to make a gift of the property into a trust. The property becomes an asset of the trust and you can live in the property until you die – at which point it will pass to whoever you have specified in the trust.
A trust can encompass practical issues, such as providing you with rent-free accommodation, payment of outgoings on the property and the management of repairs and insurance.
A riskier method is to gift the property outright to your beneficiaries. However, if they run into difficulties such as bankruptcy or divorce, or if they die leaving the property to their beneficiaries, you may find yourself without any asset at all.
It is also very important to bear in mind that if you deliberately deprive yourself of an asset for the purpose of enabling you to claim financial support you may be assessed by Social Services as if you had not given the asset away so you will still not qualify for financial support.
Planning what to do with your assets is rife with pitfalls and not as straightforward as might be imagined. The rules are strict and the deliberate disposal of capital to avoid liabilities can carry penalties. Such a course therefore requires careful thought and expert advice.
Examples of deliberate deprivation to be wary of include a lump sum payment, such as a gift or to pay off a debt; transferring title deeds to another person; putting money into a trust that cannot be revoked; converting money into capital that is not taken into consideration when assessing the capital threshold; and extravagant or unusual expenditure.
Where a couple are involved, leaving a half share of your house in trust in your Will does not involve the same concerns and can be a very effective and inexpensive way of safeguarding the capital of half the house if your surviving spouse needs to go into care after you have died.
Your spouse or partner can be given the right to continue to live in the property, or they can move or downsize – but that share is protected from care fees.
If the property is sold and the surviving partner needs to go into a home, the proceeds of the sale can be invested to create an income and the capital is protected.
It is also possible to build in bespoke variations to deal with individual circumstances and the needs of beneficiaries.
If the house is owned jointly, then you will need to ensure that it is owned in an appropriate way, as tenants in common and not joint tenants. This is very easy to change at little cost.
It is vital that you have a current will in place in order to ensure that your plans for your assets after your death are carried out to the letter.
Key to this element of retirement planning is to make your plans early. Transferring an asset or selling it at undervalue when faced with an imminent bill for care home fees is unlikely to succeed and can, in rare circumstances, carry criminal penalties.
Helen Honeyball can be contacted at Stones Solicitors LLP on 01392 666777. More information is available by logging on at www.stones-solicitors.co.uk.