Long Term Care - Who Foots The Bill?
It is apparently becoming more common for elderly people to gift away assets just before moving into a residential care home in order to reduce the value of their estate to below £23,500 so that the government will fund the care costs. However, it should be noted this tactic is illegal and could result in the individual's family being forced to pay for the residential care costs themselves, which on average amount to £32,000 per year in the UK.
Currently, the Local Authority will start to contribute to an individual's care or residential fees if the total net value of their assets (including their main residence) is below £23,500 and will cover all costs if this figure falls to £14,250. However, if the individual has made gifts that has reduced the value of their estate shortly prior to receiving care, this can be seen as deliberate 'deprivation of assets' by the Loal Authroity, which will thus make the individual and/or the individual's family liable to pay the costs.
Deprivation of assets - defined in the Care Act 2014 - is when an individual transfers assets out of their own name in order to improve their position in a Local Authority means test. Below is a list of ways in which an individual may do this shortly prior to receiving care:
Selling an asset for less than it's true value.
Making a lump sum gift.
Substantially increasing expenditure that is out of character with previous levels of expenditure.
Transferring the title deeds of a property.
Putting assets into trust.
Local Authorities are becoming increasingly attentive to those who gift assets before going into care. Jane Whitfield, a senior solicitor at Barrett & Co confirms this view and has stated that, "cutbacks in local government funding have resulted in Local Authorities becoming vigilant, and they are now investigating the timing and motives of property transfers much more thoroughly".
If you feel that the Local Authority has unfairly accused you of reducing the total net value of your assets to below the £23,500 threshold, you are able to appeal the decision to the Local Government Ombudsman. However, more often than not the Ombudsman has sided with the Local Authority. Since 2013, 30 appeals to the Local Government Ombudsman have either been dismissed or have ruled in favour of the Local Authority, as opposed to 14 cases that have been found in favour of the complainants.
A form of state support that funds the cost of care regardless of your wealth is 'Continuing Healthcare'. In order to qualify for this funding, an individual's need for care must be primarily due to health reasons and he/she must be suffering from an illness that requires healthcare. However, there is still no guarantee that an individual who suffers from a degenerative disease such as Parkinson's or Alzheimer's will qualify for this funding as they will be subject to complex assessments before Continuing Healthcare funding is given.
If you have any queries or concerns about the funding of residential care or healthcare, please contact Richard Higgs on (0117) 3636211