Care Home Fees, Assets and Tax – Explained!

Care Home Fees, Assets and Tax – Explained!

Many people nowadays are concerned that their assets will be diminished if they move in to a Care Home or Nursing Home in the future. According to Paying for Care* the average cost of a Care Home is £29,250 per year and if Nursing Care is required the average cost is £39,300 per year. In recent years there has been much media coverage advising people to give away assets in order to protect against these fees. The claim is that if you do not own sufficient assets in your own name then you will be assessed as not being able to pay your own fees and as such the Local Authority will pay these for you.

But what are the implications of giving away your assets? And what are the tax consequences of doing so? Here are a few frequently asked questions that we at Everys get asked and some information about the types of things you can do to protect your assets.

What assets are taken in to account when the Local Authority assess your ability to pay your own fees?

If you have capital over £23,250 you will be assessed as being able to meet the full cost of your care whilst in a home. Your capital includes things like the value of your home and the money that you have in your bank accounts.

 What assets are disregarded for the assessment?

Your personal belongings which can include your car is generally disregarded, along with most types of income, for example your pension.

Can I give away my home to my children in order to avoid paying nursing home/care fees?

You can give away your home to whoever you like but there are some potential pitfalls of doing this. If you gift your property away then you no longer have control over it. This means that the new owners can sell the house whenever they wish and release equity from it without your consent. There can also be capital gains consequences when the new owner comes to sell the house if it is not their main home. If you give your home away and continue to live in it, the value of the house will also be included in your Estate for inheritance tax purposes – even though you no longer own it. You may also fall foul of the ‘deliberate deprivation’ of asset rules.

What is deliberate deprivation of assets?

If you give away your assets either outright or at an undervalue (i.e below the market value) and then subsequently go in to a home the local authority may make a finding that you have deliberately deprived yourself of your assets and as such use those assets in your assessment when deciding whether you can pay your own fees. When making a decision on this basis they will consider what your age and general health was at the time of making the gift.

So what can I do to protect my assets?

At Everys our advisors can help you plan for the future and provide you with advice in order to protect your assets from Care fees, Inheritance Tax and Capital Gains Tax through your Wills and  through Trusts.   Call us today for an appointment to see how we can assist you.

*A not for profit company. Research from Laing & Buisson Care of Older People UK Market Report 2014/15.

Author – Margaret Broom, Associate, Private Client


Why do I need a Power of Attorney?

Why do I need a Power of Attorney?

Everys solicitors act for a wide range of individuals both in relation to ordinary, enduring and lasting powers of attorney.  The ideal position is to assist individuals in preparing legal documents prior to any diagnosis of dementia.  However, we are often contacted when the family reach a critical point and a dementia diagnosis has been confirmed.

A diagnosis of dementia does not mean that an individual lacks capacity.  Capacity can fluctuate and varies according to the nature of the task being performed or the decision in question.  Capacity is therefore both time and fact specific.  At Everys solicitors, we would usually meet with the individual in question, called “P” by the Courts, and their next of kin.  At that initial meeting we would establish what paperwork is in place and if there are no existing powers of attorney we would discuss whether there is sufficient capacity to prepare lasting powers of attorney in order to ensure that  P can nominate the individual(s) they want to assist them in managing their affairs in the future.

If an individual is found to have the requisite capacity then we would arrange a capacity report, usually from an elderly client psychiatrist, who would then act as witness and certificate provider. If an individual does not have the requisite capacity then it is necessary for the family to apply to the Court of Protection for a Deputyship.  Although this is a more costly procedure both in time and money terms, it means that regardless of whether P has capacity, Everys’ Private Client team can ensure that there is the correct legal document in place to ensure that someone can manage the affairs of an individual living with dementia who is unlikely to be able to continue managing their own affairs.

Article by Emma Gray