How are Care Home Fees assessed?
In England, the responsibility for funding care home fees can either be placed on the individual, the local authority or a contribution by both. When a person goes into a care home, the local authority will carry out a financial assessment to determine the person’s ability to contribute towards their own care costs. How care home fees are assessed is determined by carrying out an assessment. The local authority will take into account the following factors, but not limited to: –
1. Capital: Cash, Savings, Investments and Property
2. Income: Pensions, Benefits and any other income
What is the current threshold?
When a person’s capital exceeds the current threshold of £23,250, they will be expected to fund their own care in full. If their capital doesn’t exceed the threshold, then the local authority may contribute towards the cost. However, many people deem the threshold too low, causing the increasing chance of individuals contributing towards their own fees. There was a consultation by the previous government to increase the threshold, but this ceased when there was a change in governmental parties.
This has led to more individuals worrying about their financial position and inheritance status, causing them to reconsider their future estate planning.
Deprivation of Assets
Deprivation of Assets is when someone intentionally attempts to reduce their assets to avoid paying future care fees. If the local authority suspects that someone has deliberately deprived their assets, they can take the position that they still own/have that asset in the financial assessment and they can actually take steps to recover that asset back.
Examples of Deprivation of Assets are: –
– Gifting or transferring a property to someone else at less than the current market value
– Gifting large sums of cash or assets
– Placing assets into some trusts
We often get people mentioning a ‘7-year rule’ but unfortunately this is only in relation to inheritance tax purposes and not care home fees. There is no time limit that the local authority can go back to and instead they will look what the intention and purpose was at the time the asset was disposed of.
Estate Planning
It is vital that anyone worried about care home fees seeks independent financial and legal advice before attempting to dispose of their assets. Unknown consequences could affect the person’s future, and sometimes, the situation cannot be reversed.
Remember, you are not alone, as this topic is becoming more talked about each day. Get in touch with us to speak to a member of our team in the private client department, who can provide you with advice based on your specific circumstances.
Call our Private Client Team today on 01253 824216 or fill out a contact form HERE