Social Care Cost
The average cost of a nursing home in the UK now stands at £49,920 per year. This is of course a significant outlay for anyone in need of nursing care.
When assessing any support available for care-home fees, the Local authority will look at things like the value of your home, pension income, as well as savings and some benefits.
You may have to pay for all the care home fees yourself if you your assets exceed certain limits.
What is the limit before you have to pay for care?
Listed below are the savings and asset thresholds in the UK for 2023/24. If your assets sit above these levels, you have to fund your own care home fees.
· England
o Lower limit: £14,250 – you will need to fund some of your care fees
o Upper limit: £23,250 – you will need to fund all of your care fees
· Scotland
o Lower limit: £20,250
o Upper limit: £32,750
· Wales: One limit of £50,000
· Northern Ireland
o Lower limit: £14,250
o Upper limit: £23,250
In certain circumstances, the test will not take the value of your house into account. This may apply if your partner or a relative over the age of 60 continues to live there as their main residence.
Should I consider giving away assets to stay within these limits?
Whilst gifting money from your estate is a common and effective method of legacy planning, it is important to ensure you do not fall foul of the rules. This is because when going through a financial assessment for care, any assets given away during your lifetime may be examined.
Deliberate Deprivation of Assets
The deprivation of assets rule states that if you intentionally reduce your assets to avoid these being included in your financial needs assessment, you may be deliberately trying to avoid self-funding your care.
In this case, the Local Authority may calculate your fees as though you still owned those assets.
Intention is key here. If you were fit and healthy at the time of making gifts, with no probable concern over care planning, the amounts gifted may not count as deprivation of assets. When assessing this, the Local Authority would look at the timing of the gifts, as well as the motivating factor in giving the assets away.
What is included under these rules?
The deliberate deprivation of asset rules do not only apply to lump sum gifts of money. The rules can also capture scenarios such as:
– Transferring the title deeds of your property over to someone else
– Using savings to buy assets which are excluded from the means test
– Reckless or unusual spending patterns
How far back can the council look?
A common myth is that councils can only look back so far when assessing whether you deliberately deprived yourself of an asset. In fact, the council can go back as far as they want. Again, this would come down to what your health was like at the time of gifting and your main motivation for making the gift.
How can I ensure I don’t fall foul of the rules?
When considering making any gifts, it is important to consult a financial adviser to ensure that any transfer of ownership does not backfire in future years.
Having a financial adviser on hand can help you navigate many important life events.
Please note:
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
Sources: https://www.carehome.co.uk/advice/care-home-fees-and-costs-how-much-do-you-pay https://www.heraldscotland.com/business_hq/23675127.can-gift-assets-avoid-paying-care-home-fees/ https://www.which.co.uk/money/pensions-and-retirement/financing-later-life-care/can-i-give-away-my-property-or-assets-to-avoid-care-fees-aSMvr3r37N9t https://www.bbc.co.uk/news/uk-scotland-63923594 https://www.derekscott.co.uk/article/detail/sjpp/can-i-gift-assets-to-avoid-paying-care-home-fees.html?fbclid=IwAR1hV1k3VgImQzWAObejIhKlgTGc4LHIssDgUFU-vOMqHs2BRvhZMaq-wRk
