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Time to Think About Funding Care

Time to Think About Funding Care

Recently a friend of mine asked about being given a gift of money from his mother to do some DIY improvements on their property. I was quite pleased for them that they were able to do the much needed improvements until they let slip that thier elderly mother may have to go into a home but wanted them to have the money first. So after the alarm bells in my head stopped ringing I decided to have a look into the legal position on this.


I knew we are ageing population but I was shocked to learn that over the next 20 years the number of people aged 65 and over is estimated to increase by nearly 50%, bringing the total of OAP’s to approximately 4.75 million people. The obvious result for a vast number of families is they are having to consider the costs of paying for care at a nursing or residential home. These costs can be more than £1,000 a week depending on whether or not specialist care is required. This can cause families great hardship in the future.


It is little wonder that families who worked their whole lives and saved a little nest egg for their loved ones are thinking about what steps to take to reduce their assets in order to avoid or reduce possible care. But a word of warning – taking such steps can be very risky and should be considered very carefully.
Under the current legislation, the way Local Authorities calculate how much they will pay for care fees is done on a means tested basis. If assets exceeds £23,500 then you are expected to fund your own care. If your assets fall below £14,250 then the Local Authority will pay for all care fees without any contribution from the individual. But be aware these figures are set to increase as of April 2020, following the new legislation – The Care Act 2014, to £27,000 and £17,000 respectively.


So many families are considering ways in which they can reduce assets. The most common method is to put an asset, normally a property, into trust. This is a legal device which allows such assets to fall outside of any means tested assessment for Local Authority care fees.


My word of warning – if the Local Authority believes that a transfer of an asset away to be a ‘deliberate deprivation’ of that person’s assets then they have the legal power to challenge and investigate such a transfer. They can look at and decided upon the reason behind the setting up of the trust and whether the intention was to avoid or reduce the amount of care fees payable. They also look at whether you actually expected to have to contribute to care costs, and of course most importantly when the disposal and legal work was carried out.


If they conclude that the transfer has been a deliberate deprivation of assets they can take several actions including taking an estimated guess at the value of your property and make the financial assessment on that, take enforcement action to reverse the property transfer or which is perhaps the most heartbreaking, decide to provide only basic care with you having to fund the rest. This can lead to family disputes further down the line because the person who has ownership of the property may be asked to make up the difference and either is unable or unwilling to do that.
So until next month – stay safe and stay legal.

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