Care Homes and Care Home Fees | Thinking Ahead?
We would all like to remain independent for our entire lives but for many there will come a point where extra care during the later years is required. Many will contribute towards the cost of their care home fees, but this does not always mean having to sell your home or liquidate assets that you want to keep intact as an inheritance for your family.
How much you pay towards your care home fees will depend on your local authority. They are obliged to follow the CRAG guidelines which lay out the approach to funding that should be followed. The local authority will carry out a financial assessment to determine how much you pay, if anything, you are liable for towards the cost of your care.
The Financial Assessment
- The financial assessment looks at your income and capital and decides how much you have to pay based on this information gathered. This can include:Interest on any savings
Private and/or your State pension
Some benefits such as Pension Credit, Attendance allowance or the care component of any Disability Living Allowance you may receive.
Your savings
Any investments you may have such as stocks and shares
Any property you own
Before you have a financial assessment, do check that you are receiving all the benefits that are due to you. This is because your potential contribution to care home fees is worked out as if you are receiving all relevant benefits.
Whatever you are assessed to contribute towards care home fees, you must be left with £21.90 a week to spend as you wish. If you get the mobility component of the Disability Living Allowance, you will continue to receive this even after you have taken up residential care.
If you live in England and have over £23,000 in capital (2009/2010), the financial assessment will conclude that you are able to meet the full cost of your care home fees. If you have below £14,000 in capital, it will be disregarded in the final calculations.
Do I have to sell my house?
You might have to but not in every case. If you move into permanent residence in a care home, the local authority may include your house as capital after 12 weeks. However, if certain people still live in your house, it will be excluded as capital in the calculations. The people who can continue to live in your home include:
- Your husband, wife civil partner or partner
- Your ex-husband, wife or civil partner or ex-partner if they are a single parent
- Your carer
If you go into a care home on a temporary basis, you will not have a financial assessment for the first eight weeks of your stay. If you stay for nine weeks or longer, the local council will then carry out a financial assessment, but as your stay is only temporary, your house will not be counted as capital.
Deferred payment
If you want to keep your home because you believe you will be fit enough to return and lead an independent life again, you can arrange with your council to make deferred payments. The council may make such an agreement with you if you are:
- Trying to retain your house
- If you have to pay all your care home fees because your home is counted as capital
- If you do not have enough income or other capital to pay the fees
Avoiding the full impact of paying for care home fees can be made easier if your house is owned as joint tenants. As long as there is no indication that you are deliberately trying to avoid paying for your care home costs by transferring your property rights over to your spouse with the intention of avoiding paying for care home costs, splitting the ownership of a property as joint tenants can protect half the value of the property from care home fee assessment. This cannot be done purely to avoid paying care home fees, but should be done for another, valid reason such as ensuring that your children can inherit if your spouse remarries.
Family Trusts
You can transfer ownership of your home to another family member while still alive. You can also make gifts to family members, but be aware that the council may assess you differently if they believe that this is done to reduce your capital before an assessment and to try and avoid paying care home fees. This is called deliberate deprivation and is potentially an issue for any disposals you make that could be seen to have been done to avoid paying care home fees.
It might be worth considering renting your home and using the income to pay the care home fees.
Have an up to date Willl
Before you take up care home residence, it is strongly advised that you make sure that your Will is up to date.
Have you considered setting up a Lasting Power Of Attorney?
It may be a good time to make a Lasting Power of Attorney which would allow people you trust to manage your financial affairs.
