Are you at a point in your life where you’re considering whether you’ll need long-term care or support in the future? It is never too early to start with the planning process, but many people find it a sensitive subject. And it may eventually necessitate a move away from home to receive specialised residential care. If you own a home, we’ll show you how to avoid having to sell it to pay for care should the need arise.
What’s the plan to pay for long-term care if you or a loved one require it later in life? Will you be pressured to sell your home? Or are you still able to leave your house to family members? And what assistance is available?
Your most valuable asset
We don’t want to think about getting older and needing care when we’re frail or infirm. Nobody wants to think about having to depend on caregivers to provide us with the quality of life we deserve. Moving into care can be a traumatic and emotional experience, but your financial situation can also be a significant concern.
Making a plan now is critical if you or your family do not have access to the funds needed to pay for future care. If a care home becomes the most practical and sensible option for you, your local council will take steps to guarantee you pay as much as possible towards care home costs by selling your most highly valued asset – your home – when the time comes.
Can you avoid selling your home to pay for care fees?
If you or your spouse or partner (or certain other people) want to stay in your home, you don’t have to sell it to pay for care.
You and/or any qualifying dependents who live in your home have the right to remain there indefinitely and cannot be forced to sell to pay for your care. Any of the following people who live in your home is considered a qualifying dependant:
- your spouse or civil partner
- a close family member over 60 (or incapacitated)
- a family member under 16 for whom you are legally responsible
- your ex-spouse/partner if they are a single parent
In short, you don’t have to be concerned about your loved ones becoming homeless simply because you require care.
Understanding the cost of care
To avoid having to sell your home to pay for care, you must first understand the costs of care. The council will conduct a standard means test to determine your financial situation, taking into account any investments, savings or pensions you have, as well as the value of your home. If your combined wealth exceeds £23,250 (£40,000 in Wales and £27,250 in Scotland), you will be expected to significantly contribute to your own care.
However, if your wealth is less than these amounts, you may be eligible for assistance from your council, but you may still be required to contribute, but this may not leave much, if anything, for your family to inherit.
Care home fees can range between £30,000 and £60,000 per year, depending on the individual’s needs and preferences and the level of care required. This is why it is becoming increasingly common to protect all of your assets ahead of time and understand how to avoid selling your home if and when you enter care.
Is it possible to receive care in your own home?
The short answer is that receiving treatment in your own home – rather than moving into a residential care facility – increases the chances of receiving financial assistance – and faster. To begin with, the means test does not include your house, so only your savings and other properties are considered. Second, since you only pay for what you need (and not for housing) while you receive treatment at home, the expenses can be held much lower for a more extended period.
Finally, accessing treatment in your own home reduces the risk of injuries and other conditions that could force you to enter residential care earlier than you would like. If you need 24-hour treatment in your own home, the costs can equal or even surpass those of a care facility; but, if you are a couple who both need care, the costs may be more comparable.
Should I gift my assets to avoid care fees?
Many people wonder, “What if I give everything I have to my children first?” Then the means test will reveal that I have nothing!’ The government, believe it or not, has already considered this. Suppose you, for example, pass the deeds to your home to one of your children just before you need to go into care. In that case, the local authority will consider this a case of “deliberate deprivation of assets” and will presume you still own the house. The same is true if you give your children a large sum of money out of the blue, depleting any savings. The local authority is likely to include this money in your means test unless the gift was made several years prior or gradually over a long period of time.
A much better approach is to try to stay at home as long as possible, maybe with the assistance of visiting carers.
A Care Fee Will
If you’re wondering, “How can I shield my home from care fees?” you’ve come to the right place. You probably already realise that your home is your most important asset. It’s at the highest risk of being sold to pay for your treatment because it’s the most significant contributor to your net wealth. As a result, creating a Care Fee would is one of the most popular choices.
A Care Fee is legally recognised and approved and the simplest way to secure your home for your family once you enter a care facility. Though simple in principle, the procedure should not be taken lightly because it can be complex. However, it will shield at least half of your home’s worth in the process.
Care Fee Will – How does it work?
If you and your spouse or partner own your home together, you can specify that you both want to ‘gift’ your share to your spouse in trust to them for the rest of your lives, rather than giving it to them directly. To do so, the house must be purchased as a “tenants-in-common” property, which means you would both own a 50 per cent “share” of your home.
Tenants in common
When a couple buys a home together, they must choose whether they want to be joint tenants or tenants-in-common.
What is the difference?
If you want to own as joint tenants, your home will immediately transfer to your co-tenant upon your death. This will happen regardless of what your Will says, so be cautious.
If you want to be tenants-in-common, your share will pass to the beneficiary of your choice or a trust if your Will specifies this.
You will leave your share as you see fit as tenants-in-common, and your remaining spouse/partner will be able to live in the property for the rest of their lives. If they ever need long-term care, only half of the property will be purchased by your spouse or partner, and your half will be exempt from the council means test.