Are you at a stage in your life where you’re thinking about possible longer-term care or support you might need in later years? It’s never too early to start planning, but it can be a sensitive subject for many people. And it could eventually lead to a move out of your home to receive specialist residential care. If you’re a homeowner, we’ll explain how to avoid selling your house to pay for care if the need arises.
Your Most Valuable Asset
Getting older and needing care when we’re frail or infirm isn’t something any of us want to dwell on. None of us likes to think about having to rely on carers to give us the quality of life we deserve. A move into care can be a stressful and emotional experience, but your financial position can be another big worry.
If you or your family don’t have access to the money needed to pay for any future care you might need, making plans now is essential. If not, and a care home becomes the most sensible and practical option for you, when the time comes, your local council will take steps to ensure you can pay as much as possible towards your care home fees by selling your most valuable asset – your home.
Understanding The Cost Of Care
When it comes to understanding how to avoid selling your house to pay for care, you need to first understand the costs of care. To get the measure of your finances, the council will undertake a standard means test, taking into account any savings, investments, and pensions you have, as well as the value of your home. If your combined wealth is above £23,250 (£40,000 in Wales and £27,250 in Scotland), you’ll be expected to pay for your own care fees for the rest of your life.
But if your wealth is under these figures, you could be eligible for help from your council, but you may still need to make a contribution. Either way, in many circumstances, it might not leave much, if anything, behind for your family to inherit.
Care home fees can range anywhere from around £30,000 to £60,000 per year depending on individual needs and preferences and the level of care required. This is why it’s increasingly common to protect all your assets beforehand and understand how to avoid selling your house if and when you go into care.
Common Misconceptions
When looking at how to avoid selling your house to pay for care fees, you should contact Will Power to get practical and financial advice as early as possible and long before any care is needed. There are several procedures to go through to make sure every process is valid and permitted, so ensuring you know all the facts is crucial.
Everything will be checked in your means test by the council, so when we’re asked about how to avoid selling a property to pay for care, it’s often easier to start by dispelling some myths and starting with a few things you can’t do:
1. Transfer The Ownership Of Your House
When you make the decision to go into a care home, you’re not allowed to just sign your home, or any other financial assets, over to family members or friends to avoid care fees. There are ways to do this properly which we’ll come to later, but you can’t do this on a whim, or even a few months, before going into a care home.
2. ‘Gift’ Your Money Or Property Away Or Spend Unnecessarily
Similarly, the act of giving away your money, property, or assets is looked upon with suspicion. This includes gifting large sums of money to family or friends, buying expensive or extravagant items which can’t be included in your means test, high stakes gambling, or selling your home for a nominal fee far below its true value.
3. Hiding Your Wealth
Hiding the extent of your wealth by not disclosing the truth about your finances or disposing of your assets illicitly, are also dubious ways to avoid paying care fees. Any hidden money or assets will be tracked and traced during your means test and you’ll be tested again with those hidden funds taken into account.
All these examples are classed as a deliberate ‘deprivation of assets’. Basically, any assets are given away or disposed of intentionally in an attempt to reduce your overall capital to avoid paying long-term care fees and increase your eligibility for council-funded help.
A Care Fee Will
If you’re asking yourself “how can I protect my home from care fees?” it’s likely you already know your home is your most valuable asset. As the main contributor to your overall wealth, it’s at the greatest risk of being sold to pay for your care. For that reason, one of the most common practices is to create a Care Fee will.
A Care Fee will is a legally recognised and accepted – and often the easiest – way to protect your home for your family in the event of you going into a care home. While straightforward in theory, the process should not be taken lightly as it can be a complex undertaking. But in doing so, it can protect at least half of the value of your home.
How Does A Care Fee Will Work?
If you own your home with your spouse or partner, either with or without a mortgage, you can specify that you each want to ‘gift’ your share to your spouse in trust to them for life, rather than to them directly. To do this, the property must be owned as ‘tenants-in-common’ which means you’ll each own an equal 50% ‘share’ of your home.
Tenants in common
Whenever a couple buys a property together, they need to say whether they want to own it as tenants in common or joint tenants.
What is the difference.
If you choose to own as joint tenants then on your death your home passes automatically to your fellow joint tenant. It does this regardless of what your Will might say, so be careful.
If you chose to be tenants in common then your share does pass under your Will to your chosen beneficiary, or to a trust if this is what your Will specifies.
As tenants in common, you’re able to leave your share as you see fit and your surviving spouse/partner will be able to continue living in the property in their lifetime. If long term care is needed by them at any point, only half the property will be owned by your spouse or partner and your half protected from the council means test.
Find Out More On How To Avoid Selling Your House To Pay For Care
A Care Fee Will is a successful and popular way to avoid selling your house to pay for care, but it is a complicated process. Contact us and the Will Power team can give you all the advice you need, answer your questions, and make the process easier for you to understand.
When you’re ready to chat and look at all the options available to you in more detail, we can help you take the next steps and make the right choice, securing your home and assets quickly and efficiently.
