There are typically 6 ways to pay for your care costs. Read about what they are.
It can be a shock to many people when they find out they may have to pay over £100,000 for their care home costs. Therefore, it is only natural that people are looking at protecting their assets from nursing home fees.
One of the most regular questions we get asked is how to avoid selling your house to pay for care.
On this page, we will explain:
– The 16 most important questions to consider when thinking about avoiding care home fees or home care costs
– Protecting your assets from nursing homes
– Putting your house in trust to avoid care home fees
– What options you have to pay for your care home fees
– Gifts to avoid care home fees
– If you can you dispose of your assets before going in to care
– How to decide what the best way is to pay for your care costs
– Where you can get professional help to decide how decide how to pay your costs
One of the most difficult aspects of the realisation care is needed is the financial impact individuals and their families face.
The costs can be high and it’s only natural that people consider whether there is a possibility to protect their home from care costs. In fact, one of the most popular questions we get asked on our website is how much money can i give away before going into a nursing home?
As you will see below, this is not a simple question to answer.
Whether you’re in the later stages of considering care or would like information ahead of time so that you can plan accordingly, in this article we explain how you can possibly mitigate rather than wholly avoid care home costs can have through information and careful planning.
– You cannot deliberately look to avoid care fees by gifting your property or putting property into trust to avoid residential care home fees.
If you do this your local authority will come after you, and possibly the person that was given the gift, to reclaim what was owed. However, you can mitigate against this. Please see below.
– By purposely giving away your property, such as the family home, there is a risk that it is seen as depriving yourself of assets. If you do this, your property may still be assessed when your assets are calculated
– There are legitimate reasons as to why you can gift your assets without them potentially being used as part of the calculation to see if you have to pay for your care fees
– It is possible to put your house in to a Trust and assign your property to someone else. However, there have to be other reasons as to why you put your property in to a trust and not just because you don’t want to pay your care fees.
– The three main types of Trusts that people use to protect their property are typically: Protective Property Trust, Life Interest Trust, Interest in Possession Trust
– We VERY strongly recommend that you speak to a Trust specialist if you want to consider these options so you can ensure the trust is valid and you are not doing it simply to deprive yourself of assets. You can leave your contact details below and we will help you.
– Other methods to consider include domiciliary care and having care at home.
– The most popular way to avoid selling your house to pay for your care is to use equity release. If you own your own house, you can look at Equity Release. This allows you to take money out of your house and use that to fund your care.
Here is a short video that explains what is and isn’t possible.
Many people find themselves in denial as their health starts to deteriorate. Even though they approach old age with mobility issues or memory loss they delay considering residential care altogether.
This means that they don’t make any provisions financially in case they do need to access domiciliary or residential care in the future.
The key to avoiding residential care home fees and home care fees is to get professional help as early as possible.
Often people put off considering care and its financial implications because they don’t like to think of future issues; but it’s imperative to plan just in case to ensure you can provide the best possible care for yourself without losing out
The simple answer to this is you cannot simply give your money away.
HOWEVER, there are some circumstances where it may be possible to give away your assets and not have them included in any calculation to determine the value of your capital when assessing nursing home costs. As long as all the actions you take are legal a consequence may be that you are able to avoid care fees.
At the very least, protecting your assets from nursing homes is not possible if you have assets (including any property) worth over £23,500 collectively. You can read more here where we answer important questions about paying for care home costs.
This is the threshold at which local authorities will begin to subsidise or fully cover the cost of your care – depending on your circumstances.
Effectively this means you avoid paying nursing home costs yourself. However even in this instance, council funded care may not meet your personal preferences or requirements.
“How to not sell your property when going in to care” is one of the most popular questions we get asked.
Many people do look to put their house into trust so they don’t have to pay care home costs. However, this is not straight forward. There is more information on this below. If you do find yourself having to find a care home you can read more about it on this site.
Making the right decision at the right time can significantly increase the likelihood of you being able to retain your property, leave an inheritance and keep some disposable income behind for whatever you wish.
Therefore, on its own, you cannot sell your house to avoid care home fees unless you have some specific financial circumstances or if your family home has already been put in trust.
This is why early planning is required. You also cannot put your assets in to a trust purely to avoid care home costs. There is a risk that this could be seen as a deprivation of assets
As mentioned above, if you purposefully give away your house, money, capital or property with the aim of ensuring they are not counted towards a financial means test assessment for care costs this could be classed as a deliberate deprivation of assets.
Your Local Authority will make an assessment on whether they think you have deliberately given away your assets. If the decide that you have done this with the aim of avoiding paying your care costs, they may still calculate your fees on the basis that you still owed them.
However, the decisions that Local Authorities make can also be challenged.
To be clear, it is is still possible to put your house in to a trust if the reason isn’t to avoid care fees. Please read below for more information on how
The act of giving away your money and assets is in itself not the only thing that can be assessed. Deliberate attempts to reduce your money or assets could also be included.
For example this could include:
– Gifting someone your money
– Transferring the ownership of your home to someone else so they aren’t included in the assessment for care fees
Demonstrating unusual spending patterns and spending large sums on things you may not normally do so
– Gambling with your money
– Buying things, such as jewellery or car which might otherwise not be included when you are doing an assessment
Many people think about how to avoid selling your house to pay for care and decide that they will sign over their house to their children. However, simply signing your house over to avoid care costs isn’t possible. This would in all likelihood be seen as a deprivation of your assets.
The most common approaches that we see to give away ownership of your assets, without possibly breaking the rules of your council are below.
However, we would recommend you speak to a specialist before you do this:-
One thing you may hear some recommend is what is formally known as ‘disposal of assets’. This is different to putting your house in to a trust to avoid care home fees.
This is where individuals ‘hide’ their money so it isn’t included in a means tests by their local authority.
However despite what some may say this is never a safe strategy – local authorities are increasingly becoming adept at checking up on and identifying those who are disposing of their assets and looking at avoiding care home fees.
When disposal of assets is suspected you will be means tested using those funds by default – so you won’t gain anything or benefit from attempting to hide them.
There are often very legitimate reasons that you may have for wanting to give someone a gift, the impact of which years down the line may be that the value of these assets is not counted when assessing whether you need to meet your care fees.
Therefore, it is possible to give gifts to avoid care fees.
Some of the most popular reasons for gifting assets are:
Stopping family disputes before they occur – Being proactive with dividing your assets early on can stop any issues further down the line and you can do it whilst you’re in full control
Wanting to see the recipient of the gift enjoy it whilst you can – You may want to help a grandchild out with the purchase of a home or start a business, so you give them the money to do so.
Recognising the support provided by an individual – During your lifetime there may have been an individual that was very supportive and has made a strong contribution to your lifestyle and you want to thank them for that
Avoiding delays on distributing your estate on death – If you still retained the property in your sole name on death, a grant of probate would be required to deal with it.
Let someone else have the responsibility of maintaining your house – The task of looking after and maintaining your property may become difficult. Therefore, you may wish someone else to have the responsibility to look after it.
Giving away your home is something that you need to think carefully about. Many people thing that they can protect their assets from nursing home fees by just giving them away.
However, by giving away the ownership of your assets and, say your family home, it can leave you financially exposed in other ways. Even if the person that you gifted the property doesn’t intend to do so.
Examples of this would include:
Bankruptcy – You never know what may happen in the future. If the person who you gifted the property to has financial problems or becomes bankrupt, it is possible that the property would be taken to who the debt is owed
Divorce – If the person who received the gift gets divorced, then your home will make up the value of the estate that needs to be divided on divorce.
Death – If the person who was gifted the property was to die, then the property will be passed on along the wishes set out in their Will. These may not be in line with what you would have wanted#
Family – Unfortunately family members fall out all the time. Therefore, if you are on the wrong side of the fallout it is possible that you could also lose your property.
Sometime, a less risky approach to just giving the money away as a gift is to instead use a family trust. Whilst on their own they won’t necessarily stop you avoiding care fees they can be used to potentially mitigate them.
Therefore, whilst it may seem appealing putting property into trust to avoid care home fees, it is something you need to be very careful about.
However, that said, there may be other very real reasons as to why you have to put your property into a trust, and a consequence of this is that your property is then excluded from any means test assessment.
Whilst this approach may seem the perfect way to use a trust to avoid nursing home costs, the reality is that it is far more complex.
With many local authorities under financial pressure they are are being proactive in looking for cases where people are using trusts to avoid fees. In these types of cases they may well challenge the reason behind using a trust.
We would strongly recommend that you speak to a specialist on setting up Trusts. We have worked with Trust Inheritance a leading advisor in this area who can help you. You can call them directly on 0800 840 1187 .
Essentially a trust is something that is legally recognised and can be enforced by a court of law. The rules are often set out in the trust deed and rules and these dictate how the trust will work.
A trust is a legal entity in itself. It will have its own bank account and assets. Due to this when the Trust is set up it is registered with HMRC.
The trust will have a set of Trustees who are responsible for looking after the rules of the Trust. Typically, it is your children that are names as the Trustees. In terms of numbers there has to be a minimum up to a maximum of four Trustees.
There are many different types of Trusts that you can use. Three examples are:
– Protective Property Trusts – They allow you to save a portion of your property to pass on to loved ones. They are also known as ‘Property Trust wills’
Here is a short video that explains how a Protective Property Trust works.
– Life Interest Trusts – Allows you to allocate a beneficiary (usually yourself and/or a spouse or family members) who then has the legal right to receive income from or use a property named in the trust
– Interest in Possession Trusts – It’s a kind of trust fund set up to entitle the beneficiary to any income as soon as it is produced. They are very similar to Life Interest Trusts.
If you are thinking of using a Trust, then we cannot recommend strongly enough that you speak to a specialist in Trusts.
Leave your details at the bottom of this page and we will arrange for a Trust specialist to give you a call to help you. Or you can call 0800 840 1187 and speak to a specialist straight away.
The extent of the power your Local Authority has can often be challenged as there is at times some subjectivity involved.
However, you should note that if you do enter care within 6 months of gifting your assets and property, the council can still send the bill for the care costs to the person that the gift was gifted too.
Likewise, if you set up a trust, the local authority can still approach the Trustees of the trust.
The difficulty with gifting assets is that there is no legal time limit in which the local authority can assume that you have ownership of the asset even if you have given it away.
You could have gifted your assets many years previously and they can still count.
Whilst its not a hard and fast rule, if the gift was made whilst you were in good health then it is harder for the Local Authority to link the giving away of the asset with the aim if avoiding care fees.
As stated above, it is difficult to protect your home and avoid care fees unless your assets are below the threshold in England, Scotland, Wales and Northern Ireland.
How much you can keep before paying for care, and therefore the savings threshold, differs depending on which part of the country you live:
If you have savings and assets above this the it is likely that you will have to pay for yur care.
You can read more about paying care home fees here.
The good news for individuals requiring care and their families is that there are plenty of funding options on the table – provided the financial aspect of care is considered early enough. The sooner provisions are made the more flexible options you have.
Careful planning can ensure you fund your care in the most efficient way possible and avoid paying any unnecessary costs. An advisor can help you look at your options as well as ensure you claim all of the benefits you are entitled to. Therefore, mitigation rather than avoidance is the key.
Options include (but are not limited to) the following. You can find out more about each of these in our handy guides:
However this can also be a challenging prospect – as with so many options available it can be difficult to know which choice to make. This is why sound, professional advice is so important.
In short, the answer to this is maybe. All funding options should be considered and its important that equity release is considered as part of that. You can read more here about how equity release works.
Here is a short video that explains what equity release is.
Essentially, a scheme will allow you to borrow money against the value of your house. However, it will only be available if you intend to receive care at home.
Many schemes will not apply once you move in to a care home. If you are able to access it, you can use this to meet your care costs, make home improvements to make life a little more comfortable and continue living in your home. The lending is then only repaid on death.
The popularity and growth in these schemes is something we strongly suggest you consider if you decide to take care at home. This is a very complex area and you you do need to seek advice.
This video talks about the pros and cons of equity release.
The amount that you can get as a tax free lump sum will depend on the value of your property. Click the calculator below to see how much money you could receive to help pay for your care costs.
We have created a directory of advisors that specialise in helping people find the right equity release company. The directory has advisors listed from all over the country. You can access the equity release advisor directory here.
If you do not feel confident in choosing an advisor, you can leave your details below, and we will find an advisor for you. We do not charge for this service and it is absolutely free.
Here is a video from Martin Lewis on ‘This Morning’ explaining why you should speak to a specialist before taking on an equity release plan.
With a number of options on the table (each with rather complicated criteria and features) it can be difficult to feel confident in making a decision.
You want to ensure that whatever decision you make is right for you – which is why information and professional advice is key.
Your choice will depend on your personal financial situation and preferences – but there are a few key things you’ll need to consider.
Your funds and assets: How much money do you have? This includes savings, bonds, shares, your family home and other assets.
Your prognosis: Is your health likely to stay the same or deteriorate? Have you budgeted for either eventuality?
Inheritance Plans: If you wish to leave money or property to your relatives this will affect the type of care funding you choose.
Benefits and pensions: Are you claiming everything you’re entitled to? Could choosing one of care funding option mean that you lose your benefits? Women and men whose spouse or civil partner died before 2005 in the armed services may also be entitled to an additional War Widows or War Widowers pension.
You can find details of which benefits you may be entitled to on the gov.uk website or through booking an appointment at your local Citizens Advice Bureau.
Personal preferences: If you are very specific about the type of care home you’d like to live in (perhaps you already have one in mind) – it’s important to know the cost of this and ensure you can meet that cost indefinitely.
This article was written by Rose Walters a published writer that has written on a range of care related topics. Rose writes from a lot of personal experience and is able to bring this in to the writing alongside the specialist knowledge she has on these topics.