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CARE FEES QUESTIONS AND ANSWERS
Most of us have heard horror stories in the media concerning care fees. Such issues as having to sell our homes, loss of financial independence, or not having any inheritance to leave our children often fill us with dread. By making an amendment to the way a couple hold their house and an alteration to their Wills, it is possible to preserve half the value of the home from being consumed by care fees.
How are care fees assessed?
When a person goes into care a form is completed giving that persons financial details to social services. Included on the form will be the assets held in their sole name and their share of money held in joint accounts.
If my partner is still living at home, will I have to sell my house to pay for my care?
If one of a couple continues to live in the house, the house will be disregarded for care fees.
What if we both go into care? Or one of us dies and the survivor goes into care?
In those circumstances, the share of the house owned by each person going into care will be included in any assessment unless there was someone living in the property with you falling within the criteria preventing the house from being available for assessment
Can I give my house to my children so that it will not be used for care fees?
If the Council considers the gift was primarily to avoid care fees, then they would consider this to be voluntary deprivation of capital.
If the house has been given away within 6 months of going into care the local authority will be entitled to set the gift aside and there would be a liability to pay for care in full.
If longer than 6 months has expired, if the local authority consider a significant reason for the gift was to avoid care fees, they can still charge fees in full, although the local authoritys position is less clear as decisions are made on a case by case basis.
Additionally, by gifting your house outright to your children, you would be in a precarious position. As your house would be owned by your children it would be included in any divorce or bankruptcy proceedings and they could, for example, use it as security on a loan or force a sale.
If you give your house to your children and it increases in value between the gift and any subsequent sale, your children may be liable to pay Capital Gains Tax.
I was told that if more than 7 years had passed since the gift of my house the local authority would not be able use it to pay my care fees.
There is no time limit for this piece of legislation; the local authority can take the gift into account no matter how long ago it was provided they can show that avoiding care fees was a significant reason.
What if I cannot pay the fees?
If the local authority regards you as still owning your house, it could allow your care fees to mount up and then make you bankrupt with the idea of recovering your house under the Insolvency Acts.
So, how can I save on care fees?
Rather than the survivor receiving the entire house outright upon the first death, it is possible to amend the deeds so that the house passes under the terms of your Will. A trust is then created within your Will so that, rather than the survivor owning the entire house, they own their own half and have the benefit of the remaining half under a trust. In that way, the local authority cannot take the half share into account as the survivor does not own it.
If I dont own the property, what rights will I have to sell etc?
Provision will be included in the Wills to allow the survivor to occupy the property for as long as they need to do so. The survivor can also sell the property and purchase another using the trust monies.
What if we both go into care after we have amended our Wills and Deeds?
Unfortunately the share of the house owned would be included in each parties assessment unless there is someone living there falling within strict criteria.
I dont want to change how my house is held or my Will, is there anything else I can do?
It is possible to set up investments to pay for your care fees rather than paying them directly out of capital. Please contact us for more information.
These notes are intended for guidance only and further legal advice should be obtained regarding your own specific circumstances. For further information please contact Law4Elderly on (0800) 174223, or email info@law4elderly.com
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