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As we get older, how we plan to fund care for ourselves, our spouse or other family can become a worry. For homeowners, there is the concern that they will need to sell their property in order to fund the ever-increasing costs of care, particularly as a lot of social care offered by the government is means tested.
If property is co-owned, or is intended to be passed down the family to children as an inheritance, then you will understandably reluctant to give up ownership of that property. However, this issue very much depends on your circumstances – and whether or not your home will be taken into account to pay for your care.
Firstly, at the point you are reaching a time when you need help/support/care, you will need to notify your local authority so they can assess your care needs. Everyone is entitled to an assessment of needs under The Care Act, regardless of what money or property you have, written details should be provided to you. The next step is for the Local Authority to assess your individual financial circumstances. What can and cannot be taken into account is also set out in The Care Act and the Statutory Guidance. It is important therefore that you carefully consider how you structure your finances and take advice as to what is best for your family and what you can lawfully do. . Essentially you cannot deliberately deprive yourself of money or property. There have been considerable legal issues when families try to shelter their home and investments so they do not have to pay for care. The Universal Wealth saga is a classic example as I have written about previously. If it sounds too good to be true it will not work.
Many people do not realise that your home will be disregarded from the financial means test in certain circumstances. For example, if you will remain living at home, or you (or your partner) go into a care home on a temporary basis; also if your spouse or partner still lives at home. There are other statutory disregards for family members so it is essential to take advice so you can plan ahead. The Local Authority can also exercise their discretion to disregard assets, again depending on the circumstances.
Notwithstanding all of this, it does mean that for many people, their home will be included as part of the local authority means test. Generally, if you have more than £23,250 then you will have to pay for your care. The value of your property will need to be assessed by the local authority, this can be complex where property is co owned. If you are the sole owner of a property, then the entire market value of your home will be considered. If you have less than £23,250 when you go into a care home, other than your home, this will be disregarded for the first 12 weeks. The Local Authority may contribute towards your care during this time, depending on your income.
If you choose not to sell your property, there are other options available, such as a deferred payment agreement. This is offered by the Local Authority who will register an interest bearing legal charge against the title to your property. If/when you pass away or sell the property the loan plus interest is repaid. Another option is to purchase a care annuity. This is like an insurance policy where you pay a premium upfront, giving you the peace of mind that the costs of your care are paid for, for the rest of your life. As this is a specialist area it is best to consult an independent financial adviser who is a member of The Society of Later Life Advisers, SOLLA.
Other key considerations are ensuring your will is up to date and making a lasting powers of attorney. This is so that someone you trust can support and/or act on your behalf in your best interests if you lack mental capacity to make decisions regarding your finances.
If you would like some advice relating to your own situation, contact the Private Client team at Downs Solicitors to see how we can help.