Care Fee Planning and Property Issues
The first thing to say is that issues around your property and how they relate to the paying of care fees can be a complex business. Always take professional advice in this area! If you are unsure, please get in touch for an initial exploration call to see how we can help and/or signpost specialist support in this area.
Care Fees and Property Disregards
A property disregard means that for the purpose of assessing whether you are a ‘self-funder’ (i.e. someone who has the assets to pay for their own care) your own property is not included in that assessment. There are various ‘mandatory disregards’ where it means that the Local Authority must not include your house in this financial assessment. They most commonly include:
1. The person’s spouse is still living at home
2. A relative over 60 is still living at home
3. A family member who is incapacitated and in receipt of Attendance Allowance is still living at home
For the purpose of the above, a ‘family-member’ is a pretty wide-ranging list (the list is available in the legislation if needed), but generally means your immediate family.
In order to prove a family member still lives at home, you will need to provide various evidence of this. For example, are they registered with the local GP, do they pay Council Tax at that property, are they registered to Vote at that property, where are their belongings kept etc.
One common area of difficulty is where a family member has moved in with Mum (or Dad) to look after them and have rented out their own house. The Local Authority will often argue here that the family member has their own home – so why aren’t you living there!
Then we move on to ‘discretionary disregards’ where the Local Authority may, at their discretion, disregard the property. This is now extremely difficult to get, especially in the current economic climate. Here timing is everything!
A typical situation might be a disregarded relative (say a family member over 60) moves into the home AFTER the person went into long-term care. Here the Local Authority will want to know WHY they’ve moved into the house now. Obviously if they had moved in before the person went into long-term care then it might be easier to argue.
Another common one is where an adult child has ALWAYS lived at home – the Local Authority will investigate as to WHY they never moved out or bought their own home. The number of potential situations here are endless and the legal decision-making is not black or white – it can be a complicated area, we would always recommend taking legal representation.
If you have applied for a discretionary disregard and it has been turned down, then you should receive the reasons for refusal in writing. You can challenge a decision; however, the Ombudsman will only review the decision-making process (not the decision itself).
12 Week Property Disregard
A 12-week property disregard is when the Local Authority will disregard your property when assessing your ability to pay for your own care for the first 12 weeks you go into a care home. However, the instances when this is now available is very restricted - generally now only to the following:
1. It is now only available when your first go into care.
2. You must have less than £23,250 in assets when you go into care.
Please note you can still get the 12-week property disregard if you go into a care home and then your spouse at home dies.
If you do qualify for the 12-week property disregard, you still qualify for Attendance Allowance for the first 4 weeks in the care home. In this instance you don’t qualify temporarily for Attendance Allowance for the next 8 weeks.
Deferred Payment Agreements
If you have moved into a care home and you have under £23,250 in assets, but you do still have a house – then it might be worth looking at a Deferred Payment Agreement.
A Deferred Payment Agreement is basically a loan secured against your property to pay your long-term care costs. The Local Authority must offer it if you are in the financial situation above, although remember you will still need to contribute directly to the cost of your care you if have an income (even if your assets are below £23,250).
Deferred Payment Agreements are a potential route to go down if you are not sure what you want to do with the family home in the short-term. It does save selling the house in the short-term (possibly due to a property market dip and can buy you time if the family is undecided). It is also possible to rent out the house whilst having a DPA in place. However often, when tax, maintenance, management charges and the cost of making the property ‘lettable’ by complying with all of the landlord legislation, are taken into account, renting becomes financially unviable, and the eventual decision is to sell the home.
In order to qualify for the Deferred Payment Agreement, you will be in a care home, you will have less than the £23,250 in assets excluding your house, and the Local Authority will want a first charge security on the house. The terms are all set out in the terms of the loan, with interest rates for instance, being issued twice a year (currently 4.25%). The DPA obviously comes to an end when the person dies but also when all equity in the property is depleted, the person no longer needs care in the care home, or the property itself becomes disregarded for whatever reason.
Summary
At Harold Stephens, we are later life financial and legal planning specialists. We help families plan for later life issues such as care fee planning, inheritance tax, Lasting Power of Attorney and Wills. If you are caring for parents and they have amassed wealth, including property, pensions and investments and perhaps have big care fee decisions to be made, I would strongly recommend taking specialist advice from a SOLLA Accredited adviser. We will guide you gently through the options, giving you more clarity to make informed choices.
Don’t hesitate to get in touch with the office for complimentary initial chat. We can be reached at 50, High Street, Westbury on Trym BS9 3DZ, office@haroldstephens.co.uk or telephone us on 0117 3636 212.