What Happens to my Property if I Need to Move to a Care Home?
This is often a question that I am asked by clients and is understandably something that people are very concerned about, having worked hard for years to buy their property and create a home.
Understanding better the treatment of property in a financial assessment by the local authority for care home fees can give you some peace of mind or at least mean that you understand what could happen in the future.
This is a very wide subject and it would be impossible to cover everything within this Blog.
Firstly, it is worth setting out the two basic exemptions to means-tested care home funding:
NHS continuing healthcare: To be eligible for NHS continuing healthcare, a person must be assessed by a team of healthcare professionals. Your eligibility will depend upon how severe your needs are, not a particular diagnosis or condition.
Section 117 aftercare: Some people who have been kept in hospital under the Mental Health Act can get free help and support after they leave hospital. There are certain conditions that must be met and this is only for certain individuals.
If you are not entitled to either of the above then you would be financially assessed by the local authority to see what contribution you can pay towards your care home fees. The term ‘care home’ throughout this Blog covers both residential and nursing homes. Both your income and your capital will be included in a financial assessment. I will not be touching upon income within this Blog.
When assessing capital, your savings, investments and properties are all included. If you have capital over £23,250 then you must pay your care home fees in full. Your property will only be taken into account if the move to a care home is permanent. In addition, the property must be disregarded during the first 12 weeks after the move to the care home becomes permanent.
There are some situations where your property can be disregarded from a financial assessment. This is known as a property disregard and can be either:
Mandatory disregard: This will apply if your property is occupied by your spouse, partner, formal partner or civil partner, as well as a relative who is aged over 60, a child under 18 or a relative who is incapacitated. The local authority will need to take into account the specific circumstances of each case.
Discretionary disregard: It is difficult to define what would be included in a discretionary disregard but it is very important to know that the local authority has the power to apply the property disregard in certain other circumstances. For example, where the property is occupied by a relative who is aged under 60, a friend or another person who does not fall into the above category.
If the property has been disregarded and the family member living in that property wishes to move then the property can be sold and the family member living there can use all of the proceeds of sale to buy an alternative property. However, it is important to communicate with the local authority to ensure that agreement is achieved before committing to a sale and purchase of a property. Unless agreement from the local authority is given for your share in the property to be used towards the purchase of an alternative property, it would usually be taken into account as part of capital in the financial assessment.
Whilst it is not specifically related to treatment of property in care home financial assessments, I thought it would be useful to end with a comment regarding deprivation of capital. If you intentionally give away your money or your home to avoid them being included in a financial assessment for care home fees, this is known as deprivation of assets. If the local authority concludes that you have deliberately reduced your capital to avoid paying care home fees then they may still calculate your contribution to your care home fees as if you still owned those assets. This may mean that you find yourself in a situation where you have to pay for your care but do not have the capital in order to do so. The timing is important. If you are fit and healthy at the time of making the gift and you could not have imagined needing care at that time then the local authority may conclude that it was not deliberate deprivation of assets. Every case is judged on a case-by-case basis and, of course, there are other factors to be taken into account when you are considering giving away your property or other capital assets and you should always take legal advice to understand the consequences of doing so.
If you would like to discuss your estate planning please contact our First Contact team on 01256 320555 or email firstname.lastname@example.org. We can offer you a complimentary 30 minute appointment to see me or one of my colleagues in the Wills and Estate Planning Team.
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