Care fees and how they could affect you
Now that more of us are living longer, the prospect of needing to go into a care home looms larger in most of our minds. Most of us feel that we have worked hard to have something to leave for the children and we don’t want it all to go on paying for years and years of care. But there are a lot of myths surrounding paying for care fees, and it’s worth putting these concerns into perspective.
Currently there are about 291,000 people living in care homes, representing about 3.2% of over-65s. This percentage has been roughly stable since 2001. This shows that the vast majority of us will never go into a care home.
If we do, many people fear that the local authority will immediately take the house to pay for it. However, this is not the case. Firstly, any income you have – state pension, occupational pension, state benefits – will first be used to fund your care. If there is a shortfall, a financial assessment will be made, looking at how much capital the person going into care has. If the house is needed for the person’s spouse to live in, it will not count as part of this assessment, and there are other assets that may be disregarded too. If the person is assessed as having more than £23,250 in capital, the Local Authority will not contribute to care fees, and will leave it up to the person to fund their own care. If the person has capital between £14,250 and £23,250, then the Local Authority will make a contribution to the fees.
Many people think that the only solution to avoid the sale of the house is to give it to the children. But this has its own drawbacks – your children may get divorced, or go bankrupt, giving third parties a right to a share of your home. In addition, the Local Authority can ignore a gift if they can show that it was made only or mainly to avoid care fees, and treat you as still owning the property.
There are ways for joint owners of a house to use a trust in their wills to protect at least half of the house for the children. Every person’s circumstances are different, and it is always wise to take legal and/or financial advice when making plans for your future.
Please call me if you would like to make an appointment for advice on any aspect of this article.