Can You Protect Your Home from Care Home Fees? What You Need to Know

In the event that you need to live in a care home in the future, your current home, assets, and savings may be used to pay for your care in the future.

However, with the average costs of residential care ranging between £800-£1,400 per week, and costs for nursing care often exceeding that, it’s unsurprising that many are concerned about how they will afford this expenditure without the aid of local authorities, and how it could impact their property and financial assets.

If you or your loved ones are looking to protect a property or estate from care home fees, you may be wondering what you can do to avoid sacrificing these assets in order to pay for care.

Learn more about protecting a home from care home fees, what options are available to you, and how to remain within the law when managing care fees and personal assets.

How are care home fees assessed?

Care fee assessments are a method of means-testing to determine how much the local authority will contribute to your care costs, taking into account income, savings, and property.

This is carried out when you enter care, and the current thresholds in England are as follows:

• Below £14,250 in assets – the local authority will pay 100% of your care costs
• Between £14,250 and £23,250 – the local authority will contribute but you will be required to manage some of the cost
• Above £23,250 – you must self-fund your care in its entirety

However, your home will be exempt from this assessment if you have a spouse or partner still living there, a relative over 60, or a dependent child under 18.

Do I have to sell my home to pay for care home expenses?

You may not be obliged to sell your home to pay for care expenses, depending on the circumstances, including the aforementioned conditions of residency which may exempt you home from financial assessment.

However, if you are the sole occupant with assets over £23,250 (including the property), you will be required to fund your own care in full and it may be necessary to sell the property to fund these costs if you do not have the resources in income or savings.

It is also worth noting that your home is not factored in for assessment if you only require temporary care.

Can I give away assets in order to protect my home from fees?

Technically, you are able to give away assets as you choose.

However, this carries significant risk, and it is advisable to consider doing so well in advance of any care requirements, and highly inadvisable to do so for the purpose of protecting your property or assets from care fees.

If you are deemed to have given away assets in order to avoid paying care home fees, this may be determined by local authorities to be deliberate deprivation of assets.

What is deliberate deprivation of assets?

If upon investigation, a local authority determines you transferred property in order to avoid care fees, this will be classified as “deliberate deprivation of assets.”

There is no time limit on far back your local authority may investigate, but deprivation of assets may be determined upon the following grounds:

• If you were aware of a condition, illness, or other circumstance which would in the then-future require care and support at the time you gave the asset away
• If the local authority believes that the avoidance of paying for care and support was a factor in your decision to give away those assets
• If you gave away assets knowing that they were above the threshold of local authority support, requiring you to contribute to your care fees

What can I do to avoid selling my home to pay for care fees?

Deferred payment scheme

Under a DPA (deferred payment agreement), the council will cover your care home fees, allowing the debt to be repaid later. Deferred payment schemes enable you to delay paying care home fees until the home is sold after your death.

Rent out your home

Renting out your home can be a great solution to sale, as it generates revenue which can be used to reduce or cover care costs.

However, rental income may also contribute towards your overall asset value, reducing the amount of local council contribution you are entitled to.

Protect your home through trusts

You may consider placing assets in a trust in order to ringfence your home from care costs.

An asset protection trust, such as a life interest trust or protective property trust, can preserve the value that would otherwise be spent on care.

For instance, if you own a home with your spouse as a joint tenant, the first partner’s share would be held in a trust in the event of their death. The surviving partner will continue to live in the property, but only their share would be taken into consideration in the event that they require care. The share then placed in the trust may be divided between inheritors in the event of their death, reducing the amount lost to care fees.

Care annuity

A care annuity is an insurance policy designed to cover long-term care costs without requiring you to sell your property. This requires a lump upfront sum, after which your plan provider will then pay for your care fees.

The amount you pay upfront may vary depending upon a number of factors, including your health, age, and lifestyle.

Protecting your home from care fees: the next steps

It is crucial to consider the legal implications when attempting to protect any kind of property or assets, and there is no guarantee that any actions can be exempt from financial assessment by a local authority.

If you do wish to begin planning ahead for the management of your estate, you should begin as soon as possible. Furthermore, it is highly advisable to seek professional advice before taking any action. Our solicitors are experienced in care fee planning, and can advise on the best way to manage your assets so that you and your loved ones are financially prepared for the future.

Reach out to Dickinson Parker Hill solicitors today to find out more.