Property and paying for care

Property and paying for care

When people reach their later years, they may have to face the high cost of care fees. But what happens in terms of your property and paying for care? There are some situations where your home will be exempt from local authority means testing. We look at what you need to know when it comes to your home and planning for future care fees.

Financial eligibility for care fees

First, let’s start with the average cost of a care home. In the UK, it’s reported that residential care costs average between £27,000 and £39,000 per year. Nursing care costs are even higher and can increase to as much as £55,000 per year. Care fees vary by region, so it’s important to factor in the true cost of care into your financial plan, so you’re fully prepared.

There is a certain level of social care funding provided by the local authority to cover your care costs. If your total assets exceed £23,250, self-funding becomes mandatory, but there are different funding levels. Assets below £14,250 allow full financial aid, and between this and the higher amount, you could be eligible for partial funding for your care costs.

There are more options if you have limited funds. Top-up payments can bridge local authority contributions and care home costs. This extra payment makes up the difference between the amount the local authority will pay and the cost of your chosen care home. You cannot pay your own top-up; this must be made by a family member or a friend. Top-up payments can give you a better choice of care home.

Due to local authority means testing, calculating care fees can be complex and rely on the total value of your assets. Usually, your family home is exempt if your partner is still living there. But when one of you passes away, the total value of your home could be included in a future local authority financial assessment.

Tenants in common

Some people try to change property ownership in a way that could be viewed as a ‘deliberate deprivation of assets’. This is where the local authority might consider deliberate actions have been taken to avoid paying care costs.

The majority of couples own their home as ‘joint tenants’, which means that when one person dies, the other person automatically inherits the property. When it comes to care costs, the whole property value would be included in the local authority’s financial assessment.

In some cases, people change the ownership of the property to ‘tenants in common’. This means that each person has their own share of the property. When written into a Will, people could state their share of the property goes into a trust after they die. The trustees might be their adult children. If the surviving person then goes into care, only their share of the property would be included in the local authority’s financial assessment.

The problem with changing ownership to ‘tenants in common’ is the fact that the local authority could see this as a ‘deliberate deprivation of assets’. In some cases, local authorities have successfully recovered assets using these rules to insist care fees are paid.

12-week property rule

If you have to sell your home and move into a care home, there is a 12-week property disregard rule. This means the value of your home won’t be included in the local authority’s financial assessment during this period.

If you are worried about the cost of care fees and how this will affect your family home, please speak to our financial planners. We will look at your situation, talk through any potential challenges, and we will explain your options. Our team have the expertise to help you manage your estate in a non-contentious way, giving you greater financial security.

Get in touch to book a financial review with our financial planning team.