When would I have to pay for Care?

Means Testing – Upper and Lower Limits (England & N.Ireland only)
If you own more than the upper limit currently £23,250 (please see below for Scotland & Wales), (which includes your property, any cash or savings and stocks and shares) you will be expected to fund the full cost of your care fees. You would not be able to receive any financial help from your local council until your savings (assets) have been reduced to the upper limit.

If you have less than the upper savings limit or, when your savings drop to this limit, the local council will then assess your ability to pay based on both your capital and income.

If you have assets below the lower limit currently £14,250 (please see below for Scotland & Wales) then any contribution you may be required to make towards the cost of your care will be based solely on your income and your assets disregarded.

Scotland – upper savings limit is £24,750 and lower threshold £15,250
Wales – upper savings limit is £23,750 but the lower threshold is also £23,750, therefore there is no staggered period on part payment by the Local Authority / client.

Losing Your Home to Care

If you own your own home then it’s value will usually be counted as capital. There are some important exceptions to this rule.

  • Your property will be disregarded for the first 12 weeks after you enter care permanently.
  • If your husband, wife, unmarried partner or civil partner lives in your home then it’s value will not be counted as capital.
  • If a relative aged 60 or over lives in your home, it’s value will be ignored.
  • If a relative under the age of 60 who is incapacitated (ie. receiving Incapacity benefit or disability Living allowance) lives there, then again the value will be discounted.
  • If your home is occupied by your estranged or divorced partner and he or she is a lone parent with a dependent child, it’s value will be ignored.
  • The value of your property should be ignored if you are liable to maintain a child under the age of 16 and your house is the child’s main home. The child must be either a relative of yours or a relative of a member of your family.
  • There are other situations in which the council may ignore the value of your home at their discretion.

If you jointly own your home with someone who does not fit into any of the above categories ie. a relative under the age of 60 or a friend, then in this situation the council will designate a value to your Interest in the property. The value will depend on the price that your share of the property could be realistically obtained from what is termed as a willing buyer.

If your co-owner is unable or unwilling to buy your share from you, your interest in the property could be held to be worth nothing. This is because it is highly unlikely that an outsider would want to buy into a property when this would involve sharing it with someone else. ( Charging for Residential Accommodation Guide- Department of Health- C.R.A.G Regulations Section 7.019 of the Social Securities act 1970.)

You are most at risk of losing your home to care costs when you enter care after owning your home jointly with a spouse, unmarried partner, or civil partner and they have passed away. The full capital value of your home will have passed to you and you will be assessed on the property’s full value along with any formerly joint held assets, such as savings.

Whilst the council cannot force you to sell your home, if you are unable to cover your care home fees the money you owe your local council will mount up. However, the local council can allow you to defer part of your contribution if you are unable or unwilling to sell your home and you do not have enough income or other assets to cover your full fees. This will be seen as an interest free loan or a deferred payments agreement and will be paid back when your property is eventually sold, or when your estate is wound up.

The deferred payments agreements could involve a legal charge being placed on your property. The amount of money you owe will then start to incur interest 56 days after your death, or the date you terminate the deferred payments agreement. You may also have to cover any legal costs involved in placing such a charge. These costs will have to be paid up front and will not be added to your deferred payments.

Although you are able to defer the part of contribution that is based on the value of your home, you will still have to contribute any other assets or income you may have towards the costs of your care home fees.

In certain circumstances the local council may refuse to enter into a deferred payments agreements. They must state their case in writing to you and you will have the option to complain about their decision.

How Can I Prevent My Home Being Sold?

Most people work hard throughout their lives and want whatever assets they have built up to be passed down to their children and grandchildren, so losing their property to care costs is a severe blow.

The simplest way to avoid this happening is to firstly change the way in which your property is owned. Most people when buying a property with another person have the property set up as Joint Tenancy and whilst this may be the correct way to own a property in certain circumstances, for the vast majority of people this is not the best way to own a property for either Care Cost issues or Inheritance Tax liabilities.

Severing the tenancy (removing the survivorship clause in Scotland) on the property and changing the ownership to Tenants In Common, so you now each own 50% of the property (percentages of ownership can vary according to individual requirements) and then by setting up mirror Wills, each bequeathing the Testator’s share of the property to either a Property Trust or Family Trust can ensure that your home is not lost to care.

On the first of you to die their share of the property is left to the Trust, whose beneficiaries will be the spouse or partner, children, grandchildren or other named beneficiaries. Whilst the surviving partner continues to reside in the property there are no issues but once the survivor goes into care this is when property and assets will be assessed for care costs.

Once again the council would designate a value to the survivor’s interest in the property and once again the value would be dependant on the price that could be obtained from a willing buyer.

As before, it is highly unlikely that an outsider would be willing to purchase a property when part of it could be legally occupied by any of the beneficiaries named in the deceased personsTrust (usually his or her children/ grandchildren) and so, the value of the person’s share entering care would be held as being nil.

So I Can Protect My Property, But What About My Other Assets?

As previously stated, when entering Care all assets, property and income will be assessed.

Assets such as Cash, Stocks and Shares, Bank and Building Society accounts, PEPS and ISAs etc will be determined as liquid assets and in addition to any income received will be assessed for Care.

By changing the way your assets are both held and invested will ensure that they are not assessed for care costs.

As stated under the Department of Health CRAG regulations Section 6
The treatment of investment bonds in the financial assessment for residential accommodation is complex because, in part, of the differing products which are on offer. For this reason councils should seek the advice of their legal departments when they arise. However, it is possible to offer some general advice and councils are referred to the Social Security Commissioners decision R (IS) 7/98

Section 6.004 states that-
Councils are advised that if an investment bond is written as one or more life insurance policies that contain cashing-in rights by way of options for total or partial surrender, then the value of those rights has to be disregarded as a capital asset in the financial assessment for residential accommodation (see paragraph 15 schedule 10 of the Income Support (General) Regulations 1987. In contrast, the surrender value of an investment bond WITHOUT life assurance is taken into account.

Amendment 22nd October 2004
Section 6.005 states –

Income from investment bonds, with or without life assurance, is taken into account in the financial assessment for residential accommodation.

Actual payments of capital by periodic instalments from investment bonds, with or without life assurance, are treated as income and taken into account provided that such payments are outstanding on the first day that the resident becomes liable to pay for his / her accommodation and the aggregate of the outstanding instalment and any other capital sum not disregarded, exceed the current levels allowed.