The Cost of Care

May 1, 2015

The BBC has recently published a ‘care calculator’ on their website as a guide to the care system for the over 65s. This online calculator allows you to input your postcode to find out how much your care costs would amount to under your local Health and Social Care Trust (“the Trust”). Significantly around 420,000 people live in care homes across the UK, with another 1million receiving help in their homes.

The cost of care is becoming an increasing concern for many people, as it is often viewed as a greater risk than the threat of Inheritance Tax (the current rate stands at 40% of assets over £325,000.00). Should a person have individual savings over £23,250.00 they are liable to pay all of their fees for residential care. This is in accordance with the means test procedure contained in the Charging for Residential Accommodation Guide. When the resident has £14,250.00 or less, this capital is disregarded and the Trust is liable to cover the resident’s accommodation fees. The middle ground of where a resident’s capital is more than £14,250.00 and less than £23,250.00 is subject to a means test where an assessment is made as to the level of the resident’s contribution to their accommodation fees.

The Resident’s home will be included in this assessment unless one of a number of exceptions applies. These exceptions include if the resident’s stay is temporary or the resident’s home is still occupied by a spouse or partner. The Trust also has discretion concerning the resident’s home, however should they not exercise this discretion they have no power to enforce the sale without a court order. The English local authorities have taken a more aggressive approach and are increasingly dealing with this by placing a charge against the resident’s home, where they can then recover their fees upon the future sale of the property. There is concern that the Northern Irish Trusts may follow suit and issue bankruptcy proceedings against the resident to recover their fees.

Given the difficulties outlined above people are now seeking to safeguard their assets for the next generation. Some of the options available are as follows:-

1. Adjusting jointly owned property such as bank accounts etc.
2. Making arrangements for self financing such as generating a rental income.
3. To claim the disregards relating to the home and personal assets.
4. Severing a joint tenancy and executing a will where the deceased’s share of the property will no longer pass on survivorship, but be held on trust for the beneficiaries under the trust created by the will.
5. Gifting assets.
6. Creation of an Asset Protection Trust.
7. Insurance for long term care.

A key issue in respect of the resident’s home is the timing of the disposal should they have disposed of their property to avoid paying nursing home fees. It is important to note that there is no time limit on the Trust’s right to look back at the disposal in terms of the person’s motivation. Professional advice should be sought on such a disposal as early as possible.

Should you require any further advice on the above options do not hesitate to contact our Private Client team.

An article of this kind can never provide a complete guide to the law in these areas which is not clearly decided and may be subject to change from time to time. The opinions and suggestions made within this leaflet should not be interpreted as specific advice in relation to any particular individual or individuals. Cleaver Fulton Rankin does not accept responsibility for any loss occasioned by someone acting or refraining to act on the basis of the enclosed opinions and suggestions contained in this leaflet.