You may hope for help with care home fees from your local authority, but this is means-tested and thresholds are very low.
Many people needing long-term care are forced to sell the family home and drain every last penny of savings.
So is there a way of avoiding care home costs? Sadly not.
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How the current system works
If you live in England or Northern Ireland and have assets or savings worth more than £23,250 (£50,000 in Wales and £28,750 in Scotland), you’ll have to pay for your care home fees. Below this, you’ll contribute with the amount based on means-testing.
This includes savings, income, and 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 savings fall below £14,250, only income is considered for a means-assessment.
According to healthcare analysts LaingBuisson, the average cost of nursing care is £750 a week. Age UK have a tool that uses location and type of care required to estimate care home costs.
Reforms are underway to reduce the likelihood of anyone with ongoing care needs losing their home and all savings.
The government was due to introduce a £72,000 cap on costs in April 2020 in response to the 2011 Dilnot commission, but in 2017 it was announced these plans were scrapped.
Are there ways to avoid care home fees?
Unfortunately, there isn’t an obvious way, aside from financial planning ahead of old age to give yourself enough funds to meet the cost.
Beware of taking drastic action to avoid the cost of care.
It could be tempting to give away or sell your house to relatives to avoid the fees to avoid paying the full cost of care.
There have even been cases of people ‘selling’ houses to a relative for a nominal fee in order to transfer legal ownership.
However, this could be seen as 'deliberate deprivation' and the sale reversed, with the power to claim care costs from the person the assets were transferred to.
The local authority will ask about any previously owned assets, and take into account any reasons you’ve had to hand over assets or property to other people. They’ll consider timing, alongside any motive or intention and the fee.
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Can I protect my property by placing my house in trust?
You may be tempted to put your house into trust in order to avoid care home fees, but don't be too hasty.
By putting your house into trust and naming someone (usually your children) as the Trustees, you no longer own your house, and should you have to go into care, your property assets would no longer be calculated as part of means testing - however, although that's the logic behind putting your house into trust, in practice it can be a bit more of a minefield.
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On the surface, it might seem like the perfect way to protect your children's inheritance, but local authorities are increasingly wise to these type of schemes, with teams in place to ensure residents are not using them to get out of paying rising care costs.
Crucially, seek expert advice and make sure you know the rules around care costs to avoid falling into any traps and losing more than necessary.
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