One of the biggest worries for retired people is funding the cost of residential care when they are no longer able to live independently. Many people are also concerned that the assets that they have earned during the course of their lifetime will be used to fund this care and so will not pass to their intended beneficiaries.
While you cannot try to avoid nursing home fees by deliberately transferring your assets when the need for residential care arises, there are measures that can be taken to plan for this eventuality.
If you own your own home then it’s value will usually be counted as capital. There are some important exceptions to this rule.
- Your property will be disregarded for the first 12 weeks after you enter care permanently.
- If your husband, wife, unmarried partner or civil partner lives in your home then it’s value will not be counted as capital.
- If a relative aged 60 or over lives in your home, it’s value will be ignored.
- If a relative under the age of 60 who is incapacitated (ie. receiving Incapacity benefit or disability Living allowance) lives there, then again the value will be discounted.
- If your home is occupied by your estranged or divorced partner and he or she is a lone parent with a dependent child, it’s value will be ignored.
- The value of your property should be ignored if you are liable to maintain a child under the age of 16 and your house is the child’s main home. The child must be either a relative of yours or a relative of a member of your family.
There are other situations in which the council may ignore the value of your home at their discretion.
If you jointly own your home with someone who does not fit into any of the above categories ie. a relative under the age of 60 or a friend, then in this situation the council will designate a value to your Interest in the property. The value will depend on the price that your share of the property could be realistically obtained from what is termed as a willing buyer.
If your co-owner is unable or unwilling to buy your share from you, your interest in the property could be held to be worth nothing. This is because it is highly unlikely that an outsider would want to buy into a property when this would involve sharing it with someone else. ( Charging for Residential Accommodation Guide- Department of Health- C.R.A.G Regulations Section 7.019 of the Social Securities act 1970.)
You are most at risk of losing your home to care costs when you enter care after owning your home jointly with a spouse, unmarried partner, or civil partner and they have passed away. The full capital value of your home will have passed to you and you will be assessed on the property’s full value along with any formerly joint held assets, such as savings.
How Can I Prevent My Home Being Sold?
The simplest way to avoid this happening is to firstly change the way in which your property is owned. Most people when buying a property with another person have the property set up a joint tenancy and whilst this may be the correct way to own a property in certain circumstances, for the vast majority of people this is not the best way to own a property for either Care Cost issues or Inheritance Tax liabilities.
Severing the tenancy on the property and changing the ownership to,Tenants in Common, so you now each own 50% of the property (percentages of ownership can vary according to individual requirements) and then by setting up mirror Wills, each bequeathing the Testator’s share of the property to either a Property Trust or Family Trust can ensure that your home is not lost to care.
So I Can Protect My Property, But What About My Other Assets?
Assets such as Cash, Stocks and Shares, Bank and Building Society accounts, PEPS and ISAs etc will be determined as liquid assets and in addition to any income received will be assessed for Care.
By changing the way your assets are both held and invested will ensure that they are not assessed for care costs.
The subject of protecting assets from care can be complex and requires expert advice, we can guide you through the process to ensure that you have the maximum protection under the current regulation.
Will Writing and estate planning is not regulated by the Financial Conduct Authority.