how to avoid care home fees in the uK

April 2024

21 Ways To Avoid Care Home Fees | April 2024

This article explores the complexities surrounding the avoidance of care home fees, offering insights into legal strategies and financial planning to protect assets.

It will help you understand the importance of early planning, the benefits of legal and financial advice, and the actions you can take to safeguard your assets.

The article will help you do the following:

  1. Identify 21 ways you can reduce, mitigate and avoid care fees.
  2. Grasp the significance of exploring options to protect assets against care home fees.
  3. Gain knowledge on legal frameworks and financial strategies to minimise care home expenses.
  4. Discover the main topics, including trusts, equity release, and asset disposal implications.
  5. Recognise the advantages of early planning and professional advice in asset protection.
  6. Take informed steps towards asset protection, including seeking professional help and considering alternative care arrangements.

Key Takeaways & Learnings From This Page On Avoiding Care Fees

Here are 7 key takeaways from the article:

  1. Understanding the legalities around asset protection is crucial to avoid penalties for asset deprivation.
  2. Equity release can offer a way to fund care without selling your home, but it’s important to understand the conditions.
  3. Properly established trusts can safeguard your property, but they must be set up with legitimate reasons beyond just avoiding care fees.
  4. The impending cap on care costs in England provides some financial relief but doesn’t cover all care-related expenses.
  5. Early professional advice is key to devising effective strategies for asset protection and care funding.
  6. It’s important to be aware of the risks and implications of transferring assets to avoid care fees.
  7. Alternative care options, such as domiciliary care, can be a viable solution to avoid high care home fees.

Topics that you will find covered on this page

Avoiding Paying For Care Home Fees

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 paying for care home fees and home care fees is to get financial advice as early as possible.

A Video On How To Avoid Care Home Fees

21 Ways To Avoid Care Fees

Below we have set out 21 ways that you can reduce, mitigate or avoid care home fees.

1. Seek Financial Advice

What is it

Seeking financial advice involves consulting with a financial advisor or planner who is knowledgeable about care funding, estate planning, and the legalities of managing assets in the context of long-term care needs. These professionals can offer tailored advice based on an individual’s financial situation and future care needs.

How It Helps You Avoid Care Fees

While not directly reducing care fees, professional financial advice can help you navigate the complex landscape of care funding, asset management, and potential benefits eligibility. This could lead to a more informed and strategic approach to managing your assets and income in a way that could reduce the impact of care fees on your finances.

Pro

  • Tailored advice based on individual financial situations.
  • Helps in making informed decisions about asset management and care planning.
  • Can identify entitlements and benefits you may not be aware of.

Con

  • Professional advice can be costly.
  • Not a direct method for reducing care fees.
  • Requires time and effort to find a reputable advisor.

2. Assessment for NHS Continuing Healthcare

What is it

NHS Continuing Healthcare (CHC) is a funding option provided by the NHS to cover the full cost of care for individuals who are assessed as having a “primary health need”. Eligibility is not based on a specific condition but on the nature, complexity, intensity, and unpredictability of an individual’s care needs.

How It Helps You Avoid Care Fees

If eligible for NHS CHC, the NHS covers the entire cost of care, including accommodation if that care is in a care home, as well as healthcare and personal care costs. This means that the individual does not have to pay for their care fees, as it is fully funded by the NHS.

Pro

  • Covers all care costs if eligible, regardless of personal finances.
  • Includes both healthcare and personal care.
  • Can be received in various settings, including in a care home or in your own home.

Con

  • The assessment process can be complex and lengthy.
  • Criteria for eligibility are strict, focusing on health needs.
  • Eligibility may be reviewed and can change over time.

3. Equity Release

What is it

Equity release schemes allow homeowners to access the value tied up in their property, either through a loan (lifetime mortgage) or by selling part of their home (home reversion), while continuing to live there. This allows them to receive care at home.

Most equity release products are repayable if you go into a care home, so you can only use it if you receive care at home.

How It Helps You Avoid Care Fees

The money released can be used to fund home care and live in care fees directly, providing a significant source of income without the need to move out of your home.

Pro

  • Enables access to cash without having to sell your home.
  • No monthly repayments are required with a lifetime mortgage.
  • Can provide a lump sum or regular income.

Con

  • Interest can quickly increase the amount owed.
  • Reduces the value of your estate for inheritance.
  • Home reversion means selling a part of your home for less than market value.

Watch the video below on the pros and cons.

Try Age Partnership’s equity release calculator and estimate how much money you could release from your property.

If you take out a product from Age Partnership, we will receive a fee for introducing you to them. This helps support the site and for us to produce more content.

Call Boon Brokers on 0333 567 1607 to discuss your equity release requirements and to see how you can use it to receive care at home

4. Deferred Payment Agreements

What is it

A Deferred Payment Agreement (DPA) is an arrangement with the local authority that allows you to use the value of your home to help pay for care home costs. The agreement means you can delay repaying the local authority until a later date, typically when the home is sold.

How It Helps You Avoid Care Fees

This arrangement doesn’t reduce care fees but helps manage how and when they are paid, avoiding the immediate sale of your home to cover care costs. It allows for a delay in payment until you choose to sell your home or after your death.

Pro

  • Avoids the need to sell your home immediately to pay for care.
  • Gives you time to decide the best time to sell your property.
  • The debt is secured against your home, not against other assets.

Con

  • Interest is charged on the amount deferred, increasing the amount owed over time.
  • Requires equity in your home to qualify.
  • The agreement must be repaid, usually from the sale of your home.

I’ll continue with the next set of options in the following response to cover all 21 points comprehensively.

5. Care Needs Annuity

What is it

A Care Needs Annuity is a type of insurance policy where you pay a lump sum upfront in exchange for a guaranteed income for life. This income is specifically designed to cover the cost of long-term care.

How It Helps You Avoid Care Fees

By securing a Care Needs Annuity, you effectively cap the total cost of your care. The annuity pays out a regular income to cover care fees, meaning you won’t have to use other assets or income streams to pay for care.

Pro

  • Provides peace of mind with a fixed income for care costs.
  • Protects other assets from being depleted by care fees.
  • Income paid is tax-free if paid directly to a care provider.

Con

  • Requires a significant lump sum investment upfront.
  • If your care needs decrease, you may not get full value from the annuity.
  • The cost and benefits can vary widely depending on health at the time of purchase.

Here is a video showing how a care annuity works.

An annuity is individual to you and priced on your own medical history.   We work with ‘Care-Fees-Annuity’, so you can get a personalised FREE quote.*

Click the button to get a quote.

Click Here To Get An Annuity Quote

6. Renting Out Property

What is it

If you own your home and move into care, you can choose to rent out your property. This provides a regular income which can be used to help fund care fees.

How It Helps You Avoid Care Fees

The income generated from renting out your property can directly contribute towards the cost of your care fees, reducing the need to draw from savings or sell assets.

Pro

  • Generates ongoing income to contribute towards care costs.
  • Keeps the property in your possession, potentially benefiting from future property value increases.
  • Can be a more flexible option compared to selling your home.

Con

  • Being a landlord comes with responsibilities and potential stresses.
  • Rental income may fluctuate or be interrupted by periods of vacancy.
  • Property maintenance and management can be challenging from a distance or if health deteriorates.

7. Asset Restructuring

What is it

Asset restructuring involves changing the way your assets are held or invested to potentially reduce the value of your estate that is assessable for care fees. This might include gifting assets, investing in certain types of trusts, or changing the ownership of assets.

How It Helps You Avoid Care Fees

By restructuring assets, you might reduce the assessable value of your estate for care fee purposes. This can potentially lower the amount you are deemed able to contribute towards your care costs.

Pro

  • Can help protect assets for future generations.
  • Might offer tax planning advantages alongside care fee planning.
  • Flexible arrangements can be tailored to individual circumstances.

Con

  • There are strict rules against deliberate deprivation of assets.
  • Complex arrangements may have unintended tax implications.
  • Requires professional advice, which can be costly.

8. Joint Ownership

What is it

Changing the ownership status of property or assets to joint names means that ownership is shared. For couples, this often means changing the property title to tenants in common or joint tenants, depending on the desired outcome for inheritance and asset assessment.

How It Helps You Avoid Care Fees

If one owner requires care, only their share of the asset may be considered in financial assessments for care fees. This can potentially reduce the assessable amount.

Pro

  • Can protect a portion of the asset from care fees.
  • Allows for more precise estate planning.
  • Maintains some control over assets within the family.

Con

  • Complications can arise if relationships change (e.g., divorce).
  • Potential for conflict over decisions related to the property.
  • Legal implications vary depending on the form of joint ownership chosen.

9. Savings and Investments

What is it

Utilising savings and investments refers to the strategic use of your existing financial resources, such as bank savings accounts, stocks, bonds, and other investment vehicles, to fund your care costs.

How It Helps You Avoid Care Fees

By effectively managing and allocating your savings and investments, you can create a stream of income or liquidate assets in a controlled manner to pay for care fees, potentially reducing the need to sell property or other significant assets.

Pro

  • Flexibility in how assets are used and managed.
  • Potential for investment growth to outpace the cost of care.
  • Keeps assets under personal control and decision-making.

Con

  • Market volatility can affect the value of investments.
  • Requires active management and financial acumen.
  • Liquidating assets may have tax implications and could affect benefit eligibility.

10. Life Insurance Policies

What is it

Certain life insurance policies offer options that can be used to cover care costs, such as cashing in the policy or using an accelerated death benefit feature, which allows you to receive a portion of your policy’s death benefit while you are still alive if you meet certain conditions.

How It Helps You Avoid Care Fees

These options can provide a lump sum or an additional income stream to pay for care, reducing the need to use other assets or savings.

Pro

  • Provides an immediate source of funds for care.
  • Can be a cost-effective way to cover care expenses.
  • Accelerated death benefits can be received tax-free.

Con

  • Reduces the death benefit available to beneficiaries.
  • Not all policies offer features beneficial for covering care costs.
  • Cashing in a policy early can come with penalties and tax implications.

11. Local Authority Assessment

What is it

A local authority assessment is an evaluation carried out by your local council to determine your care needs and whether you are eligible for any support with funding your care. This assessment considers your physical, mental, and emotional needs to create a care plan that addresses how these can be met.

How It Helps You Avoid Care Fees

Depending on the outcome of the assessment and your financial situation, the local authority may contribute towards or cover the cost of your care. This can reduce the amount you have to pay directly for care services.

Pro

  • Personalised assessment of care needs.
  • Potential for financial support based on needs and income.
  • Can offer access to services and support not otherwise known about.

Con

  • Financial support is means-tested, so savings and assets affect eligibility.
  • The amount of support can vary greatly depending on where you live.
  • The process can be time-consuming and requires detailed financial disclosure.

12. Attendance Allowance

What is it

Attendance Allowance is a tax-free benefit for individuals over the state pension age who need help with personal care due to a disability or illness.

How It Helps You Avoid Care Fees

The benefit provides additional income to help cover the cost of care, which can reduce the amount you need to contribute from your own funds.

Pro

  • Non-means-tested, so not affected by savings or income.
  • Can be used flexibly to pay for care needs.
  • Provides recognition and financial support for care needs.

Con

  • The application process can be complex and requires evidence of care needs.
  • May not cover all care costs.
  • Level of support depends on the severity of care needs, not financial necessity.

13. Personal Independence Payment (PIP)

What is it

PIP is a benefit for people aged under the state pension age who have a long-term health condition or disability. It’s designed to help with the extra costs of living with a condition.

How It Helps You Avoid Care Fees

PIP provides a regular income to help cover the costs associated with long-term care needs, potentially reducing the amount you need to pay for care directly from personal funds.

Pro

  • Non-means-tested, focusing on the impact of a condition rather than financial status.
  • Two components (daily living and mobility) can cover a range of care needs.
  • Can be received alongside other benefits.

Con

  • The assessment process can be rigorous and stressful.
  • Not available to those over the state pension age.
  • Amount received may not fully cover all care costs.

I will continue with the remaining strategies in the next response to ensure a comprehensive exploration of each option.

14. Universal Credit and Carer’s Allowance

What is it

Universal Credit is a payment to help with living costs for those under a certain income threshold. Carer’s Allowance is a benefit for people who spend at least 35 hours a week caring for someone with substantial care needs.

How It Helps You Avoid Care Fees

These benefits can provide additional financial support to individuals and carers, helping to offset the cost of care. Carer’s Allowance, in particular, recognises the financial impact of providing care, providing a direct contribution towards care-related expenses.

Pro

  • Provides financial support to low-income individuals and carers.
  • Can be received in addition to other benefits, enhancing overall support.
  • Recognises and supports the role of unpaid carers in the care system.

Con

  • Means-tested, so savings and income can affect eligibility.
  • The application process can be complex and time-consuming.
  • May not be sufficient to cover all care costs, particularly for high-needs individualss

15. Pension Credit

What is it

Pension Credit is an income-related benefit aimed at retirees on a low income. It tops up weekly income to a minimum amount and offers extra cash for those with severe disabilities, carers, and certain housing costs.

How It Helps You Avoid Care Fees

Pension Credit can increase your income, helping to cover living costs and potentially some care fees. It can also provide access to other benefits, such as help with council tax.

Pro

  • Guarantees a minimum income for older people, improving their ability to afford care.
  • Can lead to eligibility for additional support and benefits.
  • Offers both a Guarantee Credit and a Savings Credit for extra financial support.

Con

  • Means-tested, so savings and income above certain thresholds can affect eligibility.
  • Not specifically designed to cover care costs, so may not cover extensive care needs.
  • Awareness and uptake of the benefit are low, so many eligible individuals may not claim it.

16. Downsizing

What is it

Downsizing involves selling your current home and moving to a smaller, less expensive property. This can free up equity from your home, which can then be used to fund care costs.

How It Helps You Avoid Care Fees

The proceeds from selling a larger home and moving to a smaller one can provide a significant lump sum that can be used to directly fund care costs, reducing the need to draw on other savings or income sources.

Pro

  • Can release substantial equity to be used for care.
  • May reduce living costs, freeing up more income for care.
  • Simplifies the estate, potentially making future care planning easier.

Con

  • The process of moving can be stressful, particularly for older individuals.
  • May result in leaving a familiar community and support network.
  • Transaction costs and the stress of moving can offset some financial benefits.

17. Setting Up a Trust

What is it

A trust is a legal arrangement where assets are held by trustees for the benefit of others (beneficiaries). Trusts can be used for various purposes, including estate planning and potentially protecting assets from being assessed for care fees.

The three main types of Trusts that people use to protect their property are typically;

    1. Protective Property Trust
    2. Life Interest Trust
    3. Interest in Possession Trust

How It Helps You Avoid Care Fees

Assets placed in certain types of trusts may not be counted towards your capital when assessing eligibility for care fee support. This can potentially reduce the amount you have to contribute towards your care costs.

Pro

  • Can protect assets for future generations while providing for care needs.
  • Offers flexibility and control over how assets are used and distributed.
  • Can provide tax planning and estate planning benefits.

Con

  • Complex to set up and may require ongoing management and costs.
  • Strict rules against deliberate deprivation of assets mean careful planning is needed.
  • May not always be effective in reducing care fee assessments, depending on the type of trust and timing of asset transfers.

18. Gifts and the Seven-Year Rule

What is it

Gifting assets to family members or others can be a way to reduce the value of your estate. The seven-year rule refers to the time frame in which gifts are potentially exempt from inheritance tax if you live for seven years after making the gift.

How It Helps You Avoid Care Fees

By reducing the value of your estate, you may lower your assessable assets for care fee purposes. However, there are strict rules to prevent deliberate deprivation of assets for this purpose.

Pro

  • Can help in estate planning and reducing potential inheritance tax.
  • Allows you to see the benefit of your gifts during your lifetime.
  • Can reduce assessable assets for care fee calculation, if done correctly.

Con

  • Risk of being seen as deliberate deprivation of assets with care fees in mind.
  • If you die within seven years, the gift may be subject to inheritance tax.
  • Reducing your assets can affect your own financial security and care options.

20. Spend on Immediate Needs and Home Adjustments

What is it

Spending on immediate needs refers to using your funds for current living expenses, healthcare needs, or making adjustments to your home to support aging in place, such as installing stairlifts, walk-in showers, or wider doorways.

How It Helps You Avoid Care Fees

Investing in home adjustments or spending on immediate healthcare needs can improve your quality of life and independence, potentially delaying the need for more expensive care options. This approach reduces your liquid assets, which could lower the assessable amount for care fee contributions.

Pro

  • Enhances quality of life and independence, potentially reducing future care needs.
  • Reduces assessable assets, which may lower care fee contributions.
  • Provides immediate benefits and comfort.

Con

  • Requires upfront investment, which may deplete savings.
  • Not all adjustments will increase the value of your home or be recoupable.
  • May still require future care services that are not mitigated by current expenditures.

21. Seek Local Authority and Charity Grants

What is it

Local authorities and charities often offer grants or financial assistance for individuals needing help with care-related expenses or home modifications to support ageing in place. These grants can cover a wide range of needs, from minor home adaptations to more significant care support services.

How It Helps You Avoid Care Fees

Accessing grants or financial assistance can provide necessary services or modifications without depleting your own financial resources. This can help manage or reduce the amount you need to contribute towards care fees.

Pro

  • Provides financial support without needing to repay, preserving personal assets.
  • Can cover or contribute towards essential adaptations and care needs.
  • Reduces the financial burden of care and home modifications.

Con

  • Availability of grants and assistance can vary widely by location and individual circumstances.
  • Application processes can be competitive and time-consuming.
  • May not cover all costs, requiring additional funding sources.
how much can you keep before paying for care

Can You Give Away Your Money and Assets To Avoid Care Home Fees?

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.  This means that they are not included, by your local authority, 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 care fees is not possible if you have assets (including any property) worth over £23,250 collectively.  You can read more here about paying for care home costs if you feel you will need to pay these.

£23,250 is the threshold below which local authorities in England will begin to subsidise or fully cover the cost of your care – depending on your circumstances. You can read more about the savings thresholds for England, Scotland, Wales and Northern Ireland below.

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.

Savings Threshold For Care Home Fees?

How much can you keep before paying for care depends on where you live in the UK.

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 for care home fees, differs depending on which part of the UK you live:

  • England – £23,250
  • Wales – £24,000 for home care or £50,000 for a care home
  • Scotland – £28,000
  • Northern Ireland – £23,250

If you have savings and assets above this, then it is likely that you will have to pay for your care. If you share your home with a spouse or partner then you will need to consider their circumstances too.

The above saving thresholds include any savings and income, such as a pension. Your property may be counted as capital after 12 weeks if you move into a care home on a long-term basis.

However, it won’t be counted if, say, your spouse or partner still lives there. Once your savings fall below £14,250, only income is considered for a means-assessment.

You will, therefore, need to think about how you invest your savings to ensure they work as hard as possible for you.  Therefore, we strongly recommend that you get financial advice.

Signing Your House Over To Avoid Care Costs – Is this a deliberate deprivation of assets?

As mentioned above, if you purposefully give away your house, money, wealth, capital or property with the aim of ensuring they are not counted towards a financial assessment for care costs this could be classed as deliberate deprivation of assets.   Generally, if you did the transfer a few months before going in to care them this is likely to be seen as depriving yourself of your assets.

Your local authority or council will make an assessment on whether they think you have deliberately given away your assets.  If they 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 owned them.

However, the decisions that Local Authorities make can also be challenged.

If you were fit and healthy when you transferred your assets, and could not have imagined needing care and support at the time, then it may not count as deprivation of assets.

To be clear, it is is still possible to put your house into a trust if the reason isn’t to solely avoid care fees. Please read below for more information on how you can do this.

What Counts Towards a Deliberate Deprivation of Assets?

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, both in and outside your family

– Transferring the ownership of your home to someone else in your family, so they aren’t included in the financial 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 a car, which might otherwise not be included when you are doing a financial assessment

 

What Approaches Can You Use to Reduce the Value of Your Capital and Property?

The most common approaches that we see, to give away ownership of your assets, without possibly breaking the rules of your council and local authority, are below.

However, we would recommend you speak to a specialist before you do this:-

What Assets Are Exempt from Care Home Fees?

Certain types of assets are not included in calculating a person’s ability to pay for nursing home expenses in the United Kingdom. Include the value of your primary residence if your spouse or a dependent still resides there.

Life insurance policies and annuities are also exempt, provided they do not provide a regular income. P

ersonal possessions such as jewellery, furniture, or a car are also exempt, as they are typically not considered.

If occupational and personal pensions are partially used to support a spouse or civil partner, they may not be counted in full. Typically, compensation awards held in trust or administered by a court are also exempt.

The value of a business can also be disregarded, particularly if a family member relies on its income for support. Personal injury compensation payments administered by a court or held in a trust may also be exempt from taxation.

Under certain conditions, the value of a property may be disregarded, such as when an elderly or disabled relative resides there. Understanding which assets are exempt from care home fees is essential for effective financial planning for long-term care in the United Kingdom.

Risks Of Giving Away Your Property to Protect Your Assets From Nursing Home Fees?

Giving away your home is something that you need to think carefully about.   Many people think that they can protect their assets from nursing home fees by just giving them away. Please read below about the concept of notional capital and how it could apply to your circumstances.

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:

1 – Bankruptcy

You never know what may happen in the future.   If the person you gifted the property to has financial problems or becomes bankrupt, it is possible that the property would be taken to the person to whom the debt is owed.

2 – 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 by divorce.

3 – Death

If the person who was gifted the property was to die, then the property would be passed on along the wishes set out in their Will.   These may not be in line with what you would have wanted.

4 – 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.

Gifts To Avoid Care Home Fees – What can you do to stay within the rules?

There are often very legitimate reasons that you may have for wanting to give someone a gift via a transfer of ownership of your property.  The impact of which, years down the line, maybe that the value of these assets are not counted when assessing whether you need to meet your care fees.

Therefore, it is possible to transfer money and give gifts to avoid care home fees. However, do get financial advice before you make any gifts so that you are aware of any potential consequences.

Popular reasons for gifting assets, include:

1 – Stopping family disputes before they occur

Being proactive with dividing your assets early can stop any issues further down the line, and you can do it whilst you’re in full control

2 – Wanting to see the recipient of the gift enjoy it whilst you can

You may want to help your children out with the purchase of a home or start a business, so you give them the money to do so

3 – 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

4 – 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.

5 – 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.

Can I Lose My Home if My Husband Goes into a Nursing Home?

Typically, you will not lose your home if your husband enters a nursing home in the United Kingdom. If a spouse or partner continues to reside in the home, its value is disregarded when calculating nursing home costs.

This principle is incorporated into the “means test” for social care, which determines how much individuals should contribute towards their care. This test takes into account income, savings, and other capital, but not the home if a spouse is still living there.

Despite this, there may be exceptions or complex circumstances in which professional assistance would be advantageous. For example, if a property is jointly owned, the structure of that ownership can impact its status in care fee assessments.

If the property is held as “tenants in common,” each partner owns a specific portion. This could potentially allow for some care fee planning, although this is a complex area that requires guidance.

It is important to note, however, that ‘deprivation of assets’ rules mean you cannot simply give away your property to avoid paying care costs. Such actions, if considered intentional, could still be factored into the means test.

When navigating the complexities of care home fees, it is always recommended to seek expert guidance. Care funding regulations can be complex, and adhering to them correctly is essential for protecting your assets.

Can I Gift My House to My Son to Avoid Care Costs?

To avoid care costs in the United Kingdom, you may be tempted to give your home to your son.

Due to ‘deprivation of assets’ regulations, however, this is generally not advised.

The local government may view such a transfer as an intentional deprivation of assets. If they believe you transferred the property to avoid paying for care, they can still assess you as the property’s owner.

The duration of the present is also irrelevant. There is no predetermined’safe’ period after which the council cannot consider the loss of assets.

Even if the transfer was completed many years before the care was required, it could still be contested.

There are also substantial risks associated with giving away your property. For instance, if your son were to file for bankruptcy or get a divorce, the property could be considered an asset.

Tax implications are another factor to consider. Your son may be subject to capital gains tax or inheritance tax, depending on the circumstances.

Before making such a decision, it is strongly recommended to seek professional counsel.

Numerous variables are at play, and the rules surrounding care costs and asset deprivation are intricate.

In conclusion, while it is technically possible to gift your home to your son, doing so to avoid care costs can have unintended consequences and is generally frowned upon by UK councils.

Can My Daughter Continue To Live In My House If I Go Into Care?

Many people are concerned about the possibility of a family member, particularly a daughter, continuing to reside in their home after they have moved into care. The house’s ownership status is the primary factor determining the viability of this arrangement. 

If you are the sole owner of the property, you have the authority to determine who can reside there. However, making arrangements to ensure your wishes are carried out even if you are absent or unable to communicate is essential. Creating a living trust or transferring ownership to your daughter can provide the legal framework for her to continue living in the house.

When planning for this scenario, it is also important to consider the financial implications. Your property may be considered an asset if your care is financed through a means-tested programme. 

Depending on local regulations and the specifics of your situation, this could affect your eligibility for assistance. During a “disregard period” in some areas, the value of your home is not factored into financial assessments. 

Typically, this occurs when a relative, like your daughter, continues to reside in the home. It is crucial to consult a financial advisor or attorney to comprehend the potential impact on your financial situation and care funding.

Finally, it is essential to consider your daughter’s emotional impact. The house may hold many cherished memories for both of you, and remaining in it during significant change could provide comfort and stability. 

Are Next of Kin Responsible for Care Home Fees?

When planning for the future, the question of whether next of kin are responsible for nursing home costs frequently arises. It is important to note that the person receiving care is typically responsible for paying their nursing home fees.

Nonetheless, the situation can become complicated based on the particulars of the financial and legal arrangements.

The definition of “next of kin” is crucial to this discussion.

Typically, next of kin refers to the closest surviving relative or relatives, such as children and spouses. Being a relative does not automatically impose financial obligations or debts, such as nursing home fees, on an individual.

The individual’s financial responsibility for nursing home costs is primarily determined by his or her income, savings, and assets.

In some jurisdictions, certain assets, such as a person’s home, may be considered if there is no surviving spouse or dependent relative living there.

Consequently, the individual receiving care is typically financially responsible.

When a person’s resources are exhausted, he or she may be eligible for state assistance or benefits. In such instances, the government can assist with nursing home fees.

However, the specifics can vary greatly based on local laws and regulations, and it is always advisable to consult a professional for individualised guidance.

Sometimes, families contribute voluntarily to nursing home fees. This is typically a personal decision rather than a legal requirement.

It is essential to remember that anyone who chooses to contribute should do so in a way that does not compromise their own financial stability.

New Rules For Care Home Payments from 2025

Currently, there is no maximum limit on the fees charged by care homes. This means that individuals requiring care home services could potentially face unlimited costs for their care.

However, the UK government has developed a significant policy concerning this matter.

Initially scheduled to be implemented from 2023, but now postponed to October 2025, a new system is set to be introduced.

Under this new system, residents in England will have a lifetime cap of £86,000 on their care costs.

This means that once an individual’s contribution towards their care reaches this cap, they will no longer be responsible for further care fees.

From that point onwards, the local authority will step in to cover the ongoing care costs.

This policy change addresses a critical issue where individuals, particularly homeowners, are often forced to sell their properties to fund their care needs.

The introduction of this cap is seen as a way to offer financial protection and peace of mind to those requiring long-term care.

It’s important to note, though, that this cap will not cover all expenses associated with living in a care home.

Daily living expenses, which usually include the costs for room and board, food, and utility bills, are not included under the cap. These costs will continue to be the individual’s responsibility in the care home.

Additionally, the new policy introduces a sliding scale of contributions for those with capital assets ranging from £20,000 to £100,000.

This means that individuals within this asset range will contribute towards their care costs, but the amount they pay will vary based on their exact level of capital.

This sliding scale ensures a fairer contribution system based on individual financial circumstances.

"Many people do look to put their house into a trust, so they can avoid care fees and pass their home on to their children. However, this is not straightforward and your local authority may look at whether you put your home in trust solely for the reason to avoid your care costs."

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How To Not Have To Sell Your Property When Going Into Care

“How to not sell your property when going in to care” is one of the most popular questions we get asked and people are keen to understand what their options are. 

Many people do look to put their house into a trust, so they can avoid care fees and pass their home on to their children.

However, this is not straightforward and your local authority may look at whether you put your home in trust solely for the reason to avoid your care costs.

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 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 into a trust purely to avoid care home costs.  There is a risk that this could be seen as a deprivation of assets

how to avoid selling your house to pay for care

Can the Government Take Your House to Pay for Care?

When paying for care, a common concern is whether or not the government can seize your home. This question’s answer depends on several variables, including local laws and regulations governing care payments and property rights.

In certain circumstances, the government may place a lien on a person’s property to recover the cost of care. This means that the government may claim the individual’s property if they cannot pay for their care.

Nonetheless, this typically occurs when a person’s assets, income, and savings have been depleted, and they are eligible for government assistance.

The conditions under which the government may seize your home to pay for your care vary considerably.

Consult a legal professional or an elder law attorney familiar with the laws in your jurisdiction to understand the potential risks and safeguards in place.

There may be legal safeguards and mechanisms in place to protect your property.

A spouse or dependent relative who continues to reside in the home may be exempt from the government’s claim in some areas.

Additionally, the amount that can be recovered from the property may be limited, especially if it is the primary residence.

To ensure that you are well informed and protected, planning and investigating options for financing care and safeguarding your assets is prudent.

The assistance of professionals specialising in elder law, estate planning, or financial planning can be invaluable when navigating these complex issues.

Can You Refuse To Pay Care Home Fees?

Refusing to pay care home fees is a complex issue that can lead to significant legal and financial repercussions.

Here are some things that you will need to consider:

1 – Contractual Commitment

Entering a care home typically involves signing an agreement to pay the home fees.

Refusing to honour this agreement is a breach of contract, which might prompt the care home to initiate legal proceedings for fee recovery.

2 – Financial Assessment

Before admission to a care home, your financial capacity is assessed to ascertain your ability to pay.

If you’re financially capable but refuse payment, the care home can seek legal means to obtain the owed fees.

3 – Eligibility for Local Authority Funding

If paying for care home fees is likely to cause you difficulty, you might qualify for funding from your local authority.

This is based on a means test that evaluates your income and assets.

4 – Resolving Disputes

Should there be concerns about the fairness of the fees or the quality of care, it’s advisable to communicate directly with the care home management.

Issues can also be escalated to the Care Quality Commission.

Many issues can be addressed and resolved through discussion or mediation.

5 – Implications of Non-Payment

Failing to pay care home fees can lead to serious outcomes, such as eviction from the home.

It’s crucial to consider the care recipient’s welfare when making decisions regarding fee payments.

6 – Professional Advice

Given the intricacies of care home fee payments, consulting with a legal or financial expert specialising in elder care is highly recommended.

They can offer tailored advice, including possible options for financial assistance or resolving disputes.

While it is technically possible to refuse payment of care home fees, doing so without a valid legal reason could result in serious legal and financial consequences.

It’s important to handle such situations thoughtfully and seek expert advice.

A Case Study on Avoiding Care Home Fees

This case study aims to provide insight into how you might approach this issue, maintaining a focus on legal and ethical strategies within the UK context.

Let’s take John, a 70-year-old retiree, who was concerned about the potential drain on his savings due to care home fees.

Aware of the high costs associated with long-term care, he looked for advice on how to protect his assets without compromising on the quality of care he might need in the future.

With the help of a financial advisor specialising in elder care costs, John looked at setting up a trust for his assets and ensuring his pension income was structured to minimise his contributions to care home fees.

John also looked into the possibility of a care needs assessment from his local council to understand what financial support he could be eligible for.

He discovered that certain types of assets, such as his primary residence, might not be considered in the means test if his spouse continued to live there. This information was crucial in planning how to allocate his resources effectively.

Through careful planning and legal advice, John was able to structure his finances in such a way that ensured he could afford the care he might need without exhausting all of his life savings.

This case study highlights the importance of early planning and seeking professional advice when trying to manage potential care home fees. It also serves as a reminder that with the right strategies, you can find ways to mitigate the financial impact of care in their later years, while staying within the law.

Putting a House In Trust To Avoid Care Home Fees – Can You Do This?

Sometimes, a less risky approach to avoiding care home fees, and just giving the money and wealth away as a gift, is to put your house into a trust instead.   Whilst on its own a Trust won’t always stop you avoiding care fees they can potentially be used to mitigate them.

Therefore, whilst it may seem appealing putting property into a 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.  A consequence of this is that your property may then excluded from any financial assessment. So, in the right circumstances, it is possible to avoid meeting care fees without it being seen as a deprivation of assets.

1 – What Is a Trust?

Essentially, a trust 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.

2 – Who Is Responsible For The Trust?

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 named as the Trustees.    

3 – What Type of Trusts Can You Use To Pass On Your Property?

There are many different types of Trusts that you can use.  Three examples are:

– Life Interest Trusts – Allows you to allocate a beneficiary (usually yourself and/or a spouse /partner 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.

– 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’. This video explains how this type of trust works.

putting house in trust to avoid care home fees

I Have Given Away Some Assets.  What Can The Local Authority or Council do?

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. So, if for example, you gave your family home to your children, then they could be responsible for meeting your care fees.

Likewise, if you set up a trust, the local authority can still approach the Trustees of the trust, irrespective of the time it was set up.

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 it is 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 of avoiding care fees.

Notional Capital

The value of the assets that were given away is called ‘notional capital’.

The value of a person’s ‘notional capital’ will be included in their overall asset value when they have their financial assessment.

So, in the example of giving your family home to your children, not only could you end up with the double whammy of having to pay for your care and also not having a house to fund your care costs.

What Are My Options To Pay For Care?

The good news for individuals requiring care and their families is that plenty of funding options are 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:

  1. Care Annuity
  2. Rental of Property
  3. Equity Release – You can click here to find a specialist that can help you see if it is the best option for you.
  4. Deferred Payment Schemes
  5. Using your savings and investments

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.

Our Final Thoughts

Navigating care home fees requires careful consideration and planning. We recommend:

  1. Seeking early financial and legal advice to explore all available options for asset protection.
  2. Considering the implications of equity release or setting up trusts with the help of professionals to ensure legality and effectiveness.
  3. Being mindful of the legal boundaries to avoid penalties associated with the deprivation of assets.
  4. Exploring alternative care options that may offer a more financially viable solution.
  5. Regularly reviewing your care planning strategy to adapt to any changes in circumstances or legislation.

By taking these recommended actions, you can better protect your assets and ensure your care needs are met without undue financial strain.

Meet the author

Saq Hussain

Saq is a financial expert and is responsible for the day-to-day running of the UK Care Guide website. Before taking on the operation of this site, Saq was a Director and the UK Head of DC Pensions, Benefits and Wellbeing at PwC. Saq is also a part of the steering group at the Living Wage Foundation, which has developed the UK’s National Living Pension standard.

Saq has regularly featured in the press, with examples including:

LinkedIn
Financial Times
Daily Telegraph
Daily Mail
People Mgt
Pensions Age

UK Care Guide is really proud to have been featured on some of the UK’s leading websites

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* Care-Fees-Annuity is a trading name of Keith Hargraves, an appointed representative of 2plan wealth management Ltd. Keith Hargraves is authorised and regulated by the Financial Conduct Authority and is entered on the FCA register (www.fca.org.uk) under reference 534065. If you take out a product via Care-Fees-Annuity, we will receive a fee for introducing you to them. Care-Fees-Annuity provides initial quotes free of charge and without obligation. By contacting Care-Fees-Annuity through us, the cost of any product would be the same as if you had contacted them directly. The fee we received is used to help keep our site operational and to produce new content.  

 

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Where applicable, the adverts for Boon Brokers on this page have been signed off as a Financial Promotion by Boon Brokers Limited, to ensure that they are in compliance with Section 21 of FSMA. Boon Brokers Limited is authorised and regulated by the Financial Conduct Authority (FCA). The Financial Services Register number is 973757.

The Age Partnership equity release calculator has been approved and provided by Age Partnership. Age Partnership is a trading name of Age Partnership Limited, which is authorised and regulated by the Financial Conduct Authority. FCA registered number 425432.

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