Protecting Your Property from Care Home Fees
Care home fees can have a significant financial impact on your estate, potentially reducing the inheritance you leave for your loved ones. In the UK, the cost of residential care can vary widely, but it often runs into thousands of pounds per month. Understanding how these fees work and the implications for your estate is the first step in protecting your assets.
Legal Framework
When determining eligibility for financial assistance with care home fees, local authorities conduct a means test. This test assesses your income and assets, including your home, to determine how much you should contribute to your care costs. The following points are crucial:
- Means-Testing for Care Costs: If you have capital (including property) above a certain threshold (£23,250 in England), you are expected to pay for your care in full. If your capital is between £14,250 and £23,250, you will be required to contribute to your care costs on a sliding scale.
- Deprivation of Assets Rules: If you deliberately reduce your assets to avoid care home fees, the local authority can treat you as if you still own those assets. This can include transferring property or large sums of money to family members or setting up certain types of trusts without a legitimate reason.
Strategies to Protect Your Property
There are several strategies to protect your property from care home fees, but it’s important to approach them carefully and with professional advice:
- Setting Up a Trust: Placing your property in a trust can protect it from being included in the means test. However, the timing and type of trust are critical. A properly structured trust, set up well in advance of needing care, can be effective.
- Joint Ownership: If your property is owned jointly with someone else, such as your spouse, only your share of the property’s value is considered in the means test. This can potentially reduce the amount assessed for care home fees.
- Equity Release Schemes: These schemes allow you to release equity from your property while retaining the right to live there. However, this option can be complex and may have implications for your estate and eligibility for care funding.
Considerations and Risks
While these strategies can help protect your property, they come with potential risks and legal implications:
- Potential Pitfalls: Transferring assets or setting up trusts solely to avoid care home fees can be deemed as deprivation of assets, leading to complications and potential legal action by local authorities.
- Legal Implications: Each strategy has specific legal requirements and consequences. For example, setting up a trust incorrectly can result in it being ineffective or challenged.
Professional Advice
Navigating the complexities of protecting your property from care home fees requires expert guidance. Financial advisers can help you understand the financial implications and identify suitable strategies tailored to your situation. Solicitors can provide legal advice to ensure that any measures you take are compliant with current laws and effectively protect your assets.
By working with both financial advisers and solicitors, you can develop a comprehensive plan that safeguards your property while ensuring you have access to the care you need.