What happens if you need to sell the family home to pay for care?

It’s an issue that worries many older homeowners and their children so in this blogpost we confront it head on.

When do you need to sell?

In England and Northern Ireland, you have to pay towards the cost of your care if you have savings and investments of £14,250 or more and have to pay for your care in full if you have savings and investments of £23,250 or more.  As this threshold is so low, many people who have to pay for their care have more accessible savings (e.g. cash savings, ISAs) they can use to start with to cover the difference between their pension income and the care fees. 

Even when other savings run out, you will not need to sell your home if the property is owned jointly with a partner who is still living there, or if the property is also lived in by a close relative who is incapacitated, age over 60 or under 18.

Are the sale proceeds still liable to Inheritance Tax?

Once the property is sold, if the capital is simply held in a bank account it will count as part of your estate on death.  If you are likely to have an Inheritance Tax (IHT) liability it is worth seeking financial advice.  This applies to individuals with assets worth more than £325,000 or married couples/civil partners with more than £650,000.  A financial adviser can suggest the most suitable from a number of solutions to meet your needs, including investments that are IHT-free after a short time and care plans that take a lump sum from your estate and convert it into an income for life paid directly to your care provider tax-free.  They may also refer you to a solicitor to ensure your Will distributes your assets in the most tax-efficient manner, and in line with your wishes, on death.

Richard Higgs at Wealth West provides friendly Chartered Financial Planning advice in the BS9 area, delivered on a face-to-face basis in the comfort of clients' own homes.  He specialises in advising retired clients on savings, investments, Inheritance Tax and long-term care planning.  He can be reached on (0117) 3636211 or richard@haroldstephens.co.uk

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Lidia