Sale of a home to fund care fees
We are seeing an increasing amount of people looking for different ways to protect their primary asset, typically the family home, against it being used to fund future care fees. However, with complicated legislation, it is creating a ‘grey area’ between home owners and Local Authorities as to who funds the care.
Funding for care is calculated through a ‘means test’, which assesses the value of the assets and income belonging to the person requiring care. The current savings threshold for local authority funding is £23,250, meaning that if a person has savings and assets over and above the value of this threshold, they will be self-funding the cost of their care.
If a person lives alone and is permanently moving into a care home, then unless they have sufficient other assets to fund their care then it is likely that the family home will need to be sold and the proceeds of sale will be used to fund their care. Local Authorities must allow the family home to be kept until the person passes away but in return with require a Deferred Payment Agreement so that they recoup the costs when the property is eventually sold.
However, if there is somebody else in occupation of the family home at the point care is required, this is where it becomes slightly more problematic.
Where a person is moving into permanent care, the value of their home will not be included in the ‘means test’ if a spouse or partner continues to live there. In certain circumstances, the property can also be ‘disregarded’ from the financial assessment if certain other relatives are living at the property.
If a relative such as a child who is over 60 years old is also living in the property, and they have no other home then the family home cannot be taken into consideration when carrying out the ‘means test’. However, difficulties can arise over whether certain other persons qualify as a “Qualifying Relative” and whether the Property disregard rule applies. This is usually assessed on a case-by-case basis but can mean that differing local authorities may have differing opinions as it is applied on a discretionary basis.
People may take steps to transfer the legal title to their property into the names of their children, in the hope that this may mean the property is not considered ‘theirs’ when the local authority are assessing their assets. However, since the Care Act 2014, local authorities can review previous transactions and if they are deemed to have been made deliberately to avoid paying for care fees, the value of the asset transferred can still be included in the ‘means test’.
Care funding is a hugely complex system, and most cases are assessed on a case-by-case basis, which also makes it more difficult to try and establish a common ground for each local authority. However, it is always best to seek advice from a solicitor to establish the options available to you. To get in touch with our team please contact Ann-Marie Aston, Partner in our Private Client team, on [email protected] or on 0121 733 8000 to assist.
