We receive many queries on care fees assessment and how a home can be protected from care fees and whether it counts towards the means test carried out by the local authority.
Say you are a couple and live in a home worth £850,000 and as you grow older you are worrying more about ensuring it is protected from care fees so it can be passed to your children. Is there anything you can do? Let’s look at how care fees are assessed and some scenarios.
Care fees Assessment
When someone goes into care, the local authority will carry out a financial assessment. As part of their assessment, the local authority will calculate the cost of the care and how much the individual can contribute from their own resources.
When carrying out a means test, the local authority may consider the value of the property as well as any income, savings or pension.
It is worth noting that The Care and Support (Charging and Assessment of Resources) Regulations 2014, Schedule 2, Regulation 4 states that “A local authority may disregard the value of any premises which is occupied in whole or in part by a qualifying relative of the adult as their main or only home where the qualifying relative occupied the premises after the date on which the adult was first provided with accommodation in a care home under the Act.” A qualifying relative is defined as a spouse/civil partner, partner, former partner, the person’s minor child, or a relative who is over 60 or incapacitated.
If someone has savings of over £23,250, they will have to fund the care themselves.
If someone has savings of between £14,250 and £23,250, they will need to contribute towards the cost of their care from income such as pensions and a tariff based on their capital, but the local authority will fund the rest.
Once someone’s capital reaches below £14,250, they will no longer pay a ‘tariff’ income based on their capital, but they must continue paying from income included in the means test. The council pay the remaining cost of their care.
Scenario 1
Richard and Amy are married. Richard falls unwell and needs to move into a care home where he is in the best hands. Is the value of the home considered when the local authority carry out the means test? Would Amy be liable for care home fees, and could the local authority put a charge against the home?
The good news here is that if Richard goes into care and Amy continues living in the home, then the value of the home isn’t considered by the local authority when carrying out the means test. This is because, as stated above, the local authority may disregard the value of any premises which is occupied in whole or in part by a qualifying relative of the adult as their main or only home where the qualifying relative occupied the premises after the date on which the adult was first provided with accommodation in a care home under the Act.” As she is his spouse, she falls under the definition of qualifying relative.
Amy would not be liable for care fees as only Richard’s individual’s assets would be considered. The local authority could not put a charge against the home for as long as it is being disregarded in the means test.
Scenario 2
If Richard and Amy both go into care during their lifetime would the home be part of the means test and could it be sold to fund their care?
If they both go into care during their lifetime then the home would no longer be disregarded for care fees unless there was still a relative under 18, over 60, or incapacitated living in it.
This means the value of the home would be considered for their individual means tests and it could also be sold to fund their care if they don’t have enough capital to fund themselves.
Scenario 3
Richard passes away and he has a Protective Property Trust in his Will so his share of the home passes to the trust. Amy then needs to go into care. Would the home be assessed for care fees, and would the home need to be sold to pay for care or a charge placed on it?
Amy would be assessed on her share of the property only and not the share that is in trust since this is protected. If she needs to self-fund but doesn’t have enough capital to cover this without selling the property, the local authority will seek to place a charge on her share of the property to reclaim their fees when the property is sold. This is usually referred to as a deferred payment scheme.
What can be done by Will to protect the home from care fees?
It is important to note that a Will speaks from death so any provisions in your Will takes place on death only.
A life interest trust can protect part of your home from care fees since the deceased’s share of the home has transferred to the trust so will not be counted as part of the means test assessment carried out by the local authority.
New proposals to Adult Social Care
This month the government announced proposed changes to adult social care. Currently, before someone can receive publicly funded social care, they are assessed, and the value of their assets are taken into account.
Currently if an individual has assets above the £23,250 threshold, they must fully fund their own care, rely on friends or family, or even go without care.
The proposals put forward by the Government would make the means test more generous so instead of the individual having to pay for all their care in the event their assets are above £23,250, from October 2023, they would only have to fully fund their care if their assets are more than £100,000.
Currently if someone has assets from £14,250, they must contribute towards the cost of their care. This figure will now be £20,000.
There is also set to be a cap on the amount an individual has to pay for care during their lifetime which is set at £86,000. However, this cap would only cover the cost of a care home that an individual’s local authority was willing to pay for (not all care homes). Alternatively, if someone required home care, it would only cover the number of hours their local authority thought was needed and at the price it would be willing to pay. This cap would not include the living expenses in a care home i.e. food.
These matters can be complex, but we are here to help you.
15 December 2021
The views expressed in this blog do not in any way constitute advice and are specific to the date noted. As time passes the facts can change and readers should consult their adviser for up to date advice on any matters covered within the blog. Invest Southwest offers an initial review, which is free of charge, however long it takes. From this we will be able to confirm how we can help and give you an opportunity to decide if you would like us to. Thereafter, we will provide you with detailed recommendations and exact costs. Please note that we promise not to levy any kind of fee unless we can demonstrate a benefit to you.
