As a Private Client solicitor, the question I get asked most by clients is: “How can I avoid paying care home fees?”, says Clare Newton.
For a large number of elderly people, their home is their only real asset and therefore they want to protect it as much as possible, however, the answer is quite simple; there is no legitimate way to avoid paying care home fees if you have current savings or assets totalling above the £23,250 threshold. This is why everyone should be encouraged to thinking about planning for care home fees.
The government’s recently proposed reforms to increase National Insurance contributions to help fund care costs in reality does very little to assist anyone who has a property or has capital savings exceeding the threshold. This is despite the government planning to raise the threshold slightly.
However, there are some ways you may be able protect your investments or property from being completely swallowed up by care home fees:
PLANNING FOR CARE HOME FEES – CONSIDER YOUR INCOME
Look at your income. Often people have enough monthly income to cover their care costs from pensions, investment income and other sources. If not, you may be able to generate more income from investments or even by renting out your home after you move into a care home.
PLANNING FOR CARE HOME FEES – CONSIDER THE OWNERSHIP OF YOUR PROPERTY
Look at the joint ownership of your property. If you own your property as joint tenants, which means if one of you dies it passes to the other automatically on survivorship, then you could consider changing your joint ownership of the property to ‘tenants in common’.
Being tenants in common means that you own your property in shares, usually 50% each. You can sever the joint tenancy to become tenants in common, and then you each of you can leave your respective shares of the property to whoever you wish to in your Will. In a situation where one joint owner is in a care home, their share of the property will be counted into the financial calculation for care home contributions.
If the other joint owner dies having left their share of the property to children for example, then their share of the property never forms part of the assets held by the joint owner in the care home and cannot be used to pay care home fees.
PLANNING FOR CARE HOME FEES – A FINAL NOTE OF CAUTION
Clare wants to make one final point on this topic. She is also asked a lot about signing property over to children and whether this is one way of protecting their property assets against care home fees. Her reply to this question is that this is a deliberate deprivation of assets. Additionally, people should be aware that there is no time limit on this action, so if you choose to do this, then the Local Authority will include the value of the property you have given away in any financial assessment for care home funding.
As a Private Client solicitor, I recommend you seek legal advice at the earliest opportunity to discuss your wishes and to ensure that they meet with the letter of the law.
If you have any questions in the meantime then Clare runs a free Private Client Law Clinic every Monday, 5-7pm, giving advice on Wills, Probate, Lasting Powers of Attorney and other matters including severance of joint tenancies. Just call 01636 813411 to speak to her in confidence.
NOVEMBER IS WILL AID MONTH 2021
Tallents Solicitors in Newark and Mansfield will also be taking part in Will Aid again this November.
Their Wills team will be giving their time and expertise to write single and mirror (simple joint) wills in exchange for a voluntary donation to Will Aid, which supports nine UK charities.