One of the most common questions we are asked is “Do I need to sell my house to pay for care home fees?” It’s little wonder this is a worry for many homeowners, with the costs of residential nursing care a prominent feature in the media in recent years. Private Client Solicitor Shannon Gibson discusses the current guidelines for charging for residential nursing care, and what can be done to safeguard your home.
My starting point with my clients is always to try to help put things into perspective and remind them to take what they’ve read in the papers with a pinch of salt. According to the Office of National Statistics, only 3% of the over 65 population require nursing care in a care home. That figure has risen by only 0.3% in the last ten years, despite our so-called ageing population and the population as a whole rising by 11% in the same period.
That being said, if you are one of the 3% who require nursing care in a care home, and you have to pay the fees yourself, they can quickly add up. The average stay in a care home is around two and half years, and with care home costs in Dumfries and Galloway currently ranging from £525 to £800 per week, residents can expect to have to pay upwards of £100,000 to fund their care. It’s no wonder then that clients worry they’d have to sell their home to meet the costs.
How do you know if you need to pay for care?
Firstly, its important to understand how your local Council works out whether you should pay for your care. Everyone requiring residential nursing care undergoes financial assessment. The current upper capital limit in Scotland is £28,000, which means a person who has more than £28,000 in capital needs to pay privately for their care costs. Since ‘capital’ includes the value of your home, nearly every homeowner will find themselves having to foot the bill for their care.
But, your house is not always at risk. There are certain situations in which the value of your home will not be considered as part of your financial assessment. The most common is that your husband or wife is still living at home. Or perhaps a relative lives in your house who is over 60, a child or incapacitated. In those circumstances, the value of your house will be disregarded.
Therefore, the chances are that you won’t have to sell your home. It’s only those who (a) require residential nursing care; (b) don’t fall into one of the categories where the property will be disregarded; and (c) have insufficient capital and/or income to fund their care that could face the realistic prospect of having to sell their home.
If you do find yourself in those circumstances, its important to take legal advice as soon as you can as to what you should and shouldn’t do to protect your home.
What shouldn’t you do?
You shouldn’t do anything that the Council could view as a “deliberate deprivation” from your estate to avoid paying care home fees, such as transferring your house to your children or putting your house in a ‘Family Protection Trust’. These things are often marketed as a guaranteed way to avoid care home costs, but that is not the case.
As well as the initial set up costs, which will often set you back several thousand pounds, the Council has wide-ranging powers to look back as far as they wish to any property transfers you have made. (Another common misconception is that the Council can only look back 7 years.) If the Council decides you have given your home away to avoid care home fees, they have the power to simply disregard the transfer. They will treat you as if you still own your home, and you will have to pay the fees accordingly.
So, what can you do?
- plan ahead for care home costs – it’s never too early to start planning for care home fees, which as well as putting some money aside now includes looking at your estate as a whole and how your assets are structured.
- review your Will (and your spouse’s/partner’s Will) to ensure it’s structured in the best way to protect inheritance for your loved ones.
- consider how you own your home with your spouse/partner to make sure both your assets are protected.
- consider other forms of available funding, such as care home insurance, hospital based complex clinical care and charitable funding.