Many people resent the idea of having to sell their home to pay for care home fees. So perhaps it’s not surprising I regularly receive questions about how to safeguard your parent’s home. It’s not something that’s easy to do (and in some cases it may be illegal).
How your home’s value is assessed
The rules about how someone’s capital and savings (including their home) may be assessed if they need care are complicated and are set out in more detail in the article Care home funding; who pays if your parent needs to go a care home? elsewhere in this section.
In basic terms, your home won’t be taken into account if:
- Your husband/wife/civil partner or partner lives there. There are other exceptions as well, such as if you share the home with some aged over 60 or below 16 or someone of any age who is disabled.
- The NHS pays for your care. The NHS will only fund your care if you need ‘continuing health care’ rather than social care.
- You have just moved into care. The value of your property should be ignored for the first 12 weeks that you need care in a nursing home, however not all local authorities volunteer this information.
Care fees – can you give away your home?
You might think the easy way around this is to sell your house and give away your money or to give your house to your children, but it’s not that simple. Janet Davies of Symponia, explains:
- If you need care, one of the first questions the local authority will ask is ‘do you own your own home?’: If you answer ‘no’ it will then want to know whether you ever owned your own home.
- If you previously owned your own home but have since sold it: In this case, the local authority will ask a series of questions to try and establish if you sold your house knowing you needed care (called ‘deliberate deprivation’) or if you sold your house when you had no idea you might need care.
- If the house or proceeds of its sale were given away six months or less before you needed care, it is seen as a clear case of deliberate deprivation and the local authority would use the NHS and Community Care Act 1990 to reverse the transfer.
- If the house was sold or given away more than six months before you needed care, the local authority cannot use this act, but has to use insolvency laws to investigate what happened instead.
How the local authority will investigate
What the local authority will try and establish when it investigates cases where parents have given away their home to their children or sold them and then given away the proceeds, is the motivation behind it. It’s worth bearing in mind:
– Local authorities are becoming increasingly vigilant in following up cases where houses have been sold or transferred.
SAVVY TIP: The onus is in the local authority to do the investigating, but if you previously owned your own property, they will almost certainly ask follow-up questions and investigate further if necessary.
– There is no time limit on how far they can go back. Some people mistakenly think that local authorities can only go back for a few years but, under insolvency laws, there’s no limit on how far back they can go.
– Local authorities can request the notes of meetings. If you’ve met with financial advisers or solicitors to arrange the sale or transfer of the property the local authority can — and do — examine these notes to establish the motivation for giving away or selling the house.
SAVVY TIP: Janet Davies of Symponia says that the main reason why a transfer might be ignored is if someone wanted to downsize or give assets away to reduce their potential inheritance tax bill, but that’s by no means foolproof. “If your assets and property are worth more than the inheritance tax threshold it’s likely you’ll have other assets which would take you above the local authority limits for a contribution towards your care.”
– If you’ve given money away and it’s been spent, the local authority will simply refuse to contribute towards the funding of a care home until the ‘notional capital’ — namely the value of the money that was given away/transferred — has been used up.
What to think about
It is definitely possible to give away your house or to sell it and give away the proceeds, but you may fall foul of local authority rules and be no better off and, in addition, you’ll be restricting your choice of care homes.
SAVVY TIP: Local authority funded care may not be appropriate for you. Care homes can cost between £950 and £1200 a week, while the average local authority contribution is around £550 a week.
– Talk to a specialist Talk to an independent financial adviser or solicitor who specialises in this area. Nicola Plant, a solicitor, says some solicitors may not look at the implications of a transfer. “Talk to a solicitor who’s a member of the organisation Solicitors for the Elderly as they will be experts in this area.”
Symponia has produced a care fees planning handbook which you can download for free.
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