Care Home Fee Planning and Reclaim Care Fees Advice

Avoiding Care Home Fees, Care Home Fee Planning and Reclaim Care Home Fee Advice

Long term care cannot be easily predicted as to whether it will be necessary and if it is for how long. However for clients whose principal asset is the family home early planning for long term care is essential.

There are two main ways to plan for eventual Care fees. The first is by making financial provision for the future by investment planning. The second is by “ring fencing” your assets. This briefing note addresses the second issue with particular reference to the family home.

Financial eligibility

State benefits for Care fees are means tested
Anyone with savings below a level of £23,250 is eligible for state funding. Between £14,250 and £23,250 a tariff is applied and partial funding available. Below £14,250 full funding is available (these limits apply up until April 2011 and are subject to ongoing review )

But:-

· NHS Service Care is free. Comparatively few residents in Care Homes are funded by the NHS. Funding by the NHS is limited to residents who require ongoing medical attention.

· The matrimonial home is disregarded for the duration it is occupied by a spouse, a relative over 60 or a relative who is incapacitated (in addition there are certain other categories not mentioned in this Note). But if the spouse continuing to occupy the home goes into Care the value of the home may then be assessed with the possible consequence that State funding is lost.

Possible Solutions

Ensure that the matrimonial home is owned by the husband and wife as tenants in common (usually in equal shares) rather than as joint tenants. Upon the first death a property owned as joint tenants results in the deceased spouse’s share passing automatically to the survivor. On the other hand, the share of a deceased spouse in a property owned as tenants in common passes by virtue of that spouse’s Will. If after the death of the first spouse the survivor subsequently needs Care, only 50% of the house value would form part of the financial assessment provided that the Will of the first spouse left his/her share of the family home to another member of the family. For funding assessment purposes the value of a half share of a house should be minimal since for practical purposes the sale of a 50% interest in a property is unlikely to attract any buyers.
As an alternative to 1 above clients could consider transferring the family home to a Family Trust and retaining a life interest. In essence this is a right to continuing occupation. The intended effect of this is that the family home is no longer an asset which the Local Authority can assess for the purposes of means testing.

Potential Difficulties

· Problems arise when gifts are made in order to reduce an individual’s asset position in order to make a claim for financial assistance with Care fees. This is known as deprivation of assets.

· The essential point is that the Local Authority must show that the giving away of assets has been with the intent to obtain Benefits to which the individual would not otherwise have been entitled.

· There are two key issues which are relevant in considering the question of deprivation of assets:

(1) The first of these is the timing of the gift. The closer to the point of Care, the greater will be the argument that deprivation has occurred. Early planning is therefore sensible.

(2) Secondly and crucially is the issue of motive. Documentary evidence may be crucial. It would be helpful to put in place a formal written agreement between the parents transferring the property and their children (or other relatives as appropriate) in which the children are committed to assisting their parents in the management of the home and in their welfare generally with a view to extending their occupation of the matrimonial home. Such an agreement would be strong evidence against any argument for deprivation particularly if the transfer takes place before Residential Care is contemplated.

Reclaim Care Home Fees

We have helped clients recover their care costs following an incorrect NHS Continuing Care Assessment.

Sometimes individuals in care have been forced to pay for their own fees when in reality the PCT have been responsible. We are able to get fees returned and the reclaimed costs can be substancial.