How To Protect Inheritance From Nursing Homes in the UK?
According to Care Home Fees And Costs the average weekly cost of a weekly home in the UK is currently £888. In addition to care costs, this amount includes expenses incurred for resident’s accommodation, laundry, meals, heating as well as other utility costs.
However, the amount that is due on nursing home residents depends upon the results of their Care Needs Assessment
How To Protect Inheritance From Nursing Home in the UK?
One of the most common ways that people adopt to protect their inheritance from paying nursing home fees is through asset protection trusts. Although nursing home contributions by those eligible for such care is means-tested, there are many claimants who choose to reduce their assets prior to being transferred to a nursing home to avoid them being sold or used for care home fees payment.
However, some people believe that if they are aware of deteriorating health conditions, the best way to proceed with their healthcare needs is to first make sure that their assets are not being used to pay for benefits. At other times, it may happen coincidentally that an elderly individual decided to put their inheritance in an asset protection trust even though they may be in good health but would like to make arrangements for unforeseen circumstances.
If someone decides to proceed further, they have the below options to choose an asset protection trust from:
- Protective Property Trust: This applies in case of joint ownership of property. When one partner dies, their share of the property transfers to the trust and if the other partner moves into care, only their own share will count for the means test and not that of their deceased partner.
- Life Interest Trust: In this case, the trust covers the entire property and estate of the person claiming the trust. Based on their will, their property and estate will be passed down to beneficiaries.
- Interest in Possession Trust: This is similar to the Life Interest Trust; however, under interest in possession, beneficiaries can start claiming income from the time of the trust being enforced.
For a detailed understanding of the topic, we will explore the following areas:
- Can My Daughter Continue To Live In My House If I Go Into Care?
- What Happens To My Parents’ House If They Go Into Care?
- How Much Will The Council Pay Towards Care Home?
- How To Avoid Selling Your Home To Pay For Care?
Can My Daughter Continue To Live In My House If I Go Into Care?
Yes, your daughter can continue to live in your house if you go into care, especially if you are funding your care home fees through savings or other income. In this case, your home may be considered as capital during a financial assessment by local councils but may not necessarily have to be sold to pay care home fees.
However, if your savings or investments are not sufficient to cover your care home fees, your daughter can only continue living in your house (and prevent it from being sold) by fulfilling any of the following conditions:
- She is a joint owner of the house
- She is above 60 years of age
- She is under 18 years of age
- Your spouse/partner is also living in the house
- Your former spouse/partner (who is a single parent) is also living in the house
- The house is rented out (either to her or a tenant)
This is termed “property disregard”. However, if any of these conditions are not being met, the local council has the authority of a “discretionary disregard”; under which the local council has the discretion not to include the property during a means test or consider it for sale to cover care home fees. The essential requirement, in this case, would be that the property will serve as the main residence of the claimant. In fact, if they have been living at the premises for a while especially before the parent(s) moved in to care.
What Happens To My Parents’ House If They Go Into Care?
If your parents move into a care home facility and their house becomes unoccupied, there are many options on how the premises may be used; but this depends on the results of your parents’ financial assessment carried out by local councils.
Should your parents have sufficient funds in the form of savings and investments available to bear the expense of their care home fees (whether partially or wholly) their house remains untouched with regards to care home costs. However, if their savings and investments are not enough to pay for care home costs, their house would be considered for sale for payment of care home fees by local councils.
Even if your parent’s house does come under consideration during the means test, the local authorities extend a grace period of 12 weeks in such cases so that the claimant(s) and their family members are able to make a decision about their finances and property. This means that irrespective of your decision regarding your parent’s house, they will be moved into care home residency and expenses for the first 12 weeks will be borne by the state completely.
How Much Will The Council Pay Towards Care Home?
The amount that one pays towards their care costs depends on whether they live in England, Scotland, Northern Ireland or Wales (each country has their capital thresholds that determine the claimant’s contribution as compared to that of the state) as well as the following financial aspects of the claimant:
The following criteria are applicable while calculating the amount of care home fee borne by claimants and councils each:
- If someone has savings over £ 23,250, the claimant will have to bear the entire cost of the care home fees
- If someone has savings of £14,250–£23,250, the claimant will have to contribute most of their weekly income towards care home fees. They will also pay an assumed extra amount of £1 per £250 of capital that they have
- If someone has savings below £14, 250, the claimant will not be required to pay for their care home fees from this amount and will have to pay from their weekly income
How To Avoid Selling Your Home To Pay For Care?
If someone is not willing to sell their house, there is an option of Deferred Payment Agreement according to which the homeowner signs a formal agreement with their local council. The local council agrees to bear the entire care home expense of the claimant until they are ready to sell their house or the property is sold after the death of the claimant.
Sometimes it is advisable for individuals on low income to consider their situation and make a decision whether they will be better off staying home and receiving care (as well as state benefits) or will they be taken care of better in a care home facility. In such cases, they may consider applying for any of the following options:
- Attendance Allowance
- Personal Independence Payments
Attendance Allowance is a tax-free state benefit applicable to those individuals who have surpassed the state pension age and require supervision due to their health condition. It is aimed towards providing a monthly allowance to those individuals who need assistance with meeting the extra costs of a disability or the support of a carer due to old age.
PIP (Personal Independence Payment) is a benefit intended for people aged 16 years and above; aimed to cover the additional daily costs of living with a long-term disability or illness; be it a physical or mental health condition. It is gradually replacing DLA (Disability Living Allowance).
Care home fees can be borne by the state, partially or wholly, depending upon the circumstances of the claimant or they may be self-funded, partially or wholly by those in care. According to estimates, nearly half a million people in the UK need a care home facility. Out of these 50 per cent of care home residents are self-funded while the rest of them are
Out of those care home residents who are required to bear their own expenses, there are many individuals who may be sacrificing their life long savings or property to be able to afford residency in a care facility. Those who choose not to utilise their assets or inheritance for nursing care home fees, can opt for an asset protection trust to avoid deprivation of assets.
FAQs: How To Protect Inheritance From Nursing Home UK?
Does a trust will protect assets from nursing home?
An asset protection trust can protect assets (or a proportion of them) from being used to pay nursing home fees. Even after the death of the nursing home resident, the assets may be inherited by beneficiaries mentioned in the will of the deceased.
Are family members responsible for nursing home bills in the UK?
No, family members are not responsible for paying nursing home bills in the UK. The only condition that can possibly involve them is when they jointly own a property with the nursing home resident and it needs to be sold to cover nursing home bills. However, if someone chooses to pay their parents’ nursing home bills voluntarily, they may do so.
Can nursing homes take all your money?
Nursing homes do not have the authority to automatically claim the assets or finances of their residents. It is the local council authorities who are responsible for conducting a means test to assess the contribution to be made by the nursing home resident towards their care and the amount due upon the state.
Can you put your house in trust to avoid care home fees in the UK?
Yes, you can put your house in trust to avoid care home fees in the UK. You can either opt for a
Protective Property Trust, a Life Interest Trust or a Interest in Possession Trust.
Can I gift my house to my son to avoid care costs?
Yes, you can gift your house to your son to avoid costs but you need to be careful of the time frame and evidence of intention in this regard. When local authorities conduct a financial assessment of care home claimants, they assess their timing and intention as well. If there is something peculiar about your spending pattern and they can prove deprivation of assets to avoid having to pay care home fees, your assets may be reclaimed by them to cover your care costs.