Updated: Jan 17
Ok, let's start with the biggest mistake people make about Care Home fees; gifting your assets away.
"Barbara, at the hairdressers, said that I can give my house away and if I survive 7 years then it doesn't count". Simply put, this is incorrect.
Yes, there is a 7-year rule but it does not relate to care home fees in any way. This rule relates to Inheritance Tax and should not be mixed up when discussing care home fees. Mistakes like the one mentioned happen a lot because the rules surrounding who pays for care are complex. The aim of this blog is to provide the basics but feel free to contact us for a chat, in more detail, if you wish.
So let's rewind to 2014 and the enactment of the Care Act. The legislation gave much more power to the Local Authority to investigate the assets of the person entering care.
The change was an important one for the Government; it now means that the Local Authority can investigate assets without any time restrictions.
Meaning that if you did give your house away, for example, to “deliberately deprive” yourself of an asset to avoid paying for care, then the value of that asset will still be counted in any financial assessment.
When the Local Authority carries out an assessment, they will look at a persons income and capital. If your income cannot cover your fees then your capital will be used to pay for your care.
There are circumstances in which your house may not be used in the financial assessment but the majority of the time it will be.
The current threshold, in England, is £23,250. If you have assets, including your house, that are valued at more than this, then your assets will pay for your care. If you have less than £23,250 but more than £14,250, the Local Authority will help contribute towards your care costs.
There are many reasons as to why people gift their property during their lifetime and there are several ways to plan for care costs. The Care Act does not mean that you can't do these types of gifts but it is beneficial to seek advice before you do so.
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