Many people wonder if they will lose their home if they have to pay care fees.
If you require residential care then your local authority (council) will assess your needs and your finances. This “means test” calculates the total values of your capital and income, but your home will be excluded from the calculation where:
• Your caring arrangements mean you will remain living at home
• You only go into a care home on a temporary or part-time basis
• Your partner still lives at home
• Your child is under 18 and in occupation of the property
• A close relative either aged over 60 or incapacitated lives at the home
However, if you do not fall under the above exceptions, your home will form part of your capital for the purposes of the ‘means test’, and if this total exceeds £23,250, you will likely have to pay for your care fees.
What if I own my property jointly?
If the co-owner is in occupation of your home and falls under one of the above categories, the property’s value will not factor into the ‘means test’ at all. Where you jointly own your home with someone else, only your share will be taken into account.
Furthermore, when valuing your share, the council will consider the fact that any buyer would be co-owning the property with someone else. If your share in the property is lower than the other co-owner’s share, it is advisable that you own the property as tenants-in-common (where you each own a separate share) rather than as joint tenants (where you both own the whole of the property). You should also record the shares in a Declaration of Trust.
You could also consider preparing a Life Interest Will which could potentially preserve a share in the property should the surviving co-owner end up in care.
Life Interest Wills
Life Interest Trust Wills enable co-owners of a property to protect a share of the family home from the effects of long-term care fees and come into effect when one co-owner dies. The Wills allow the survivor to benefit from the deceased co-owner’s share of the property without it actually passing to them. This ensures that the deceased co-owner’s share in the property ultimately passes to their beneficiaries, rather than being used on the surviving co-owner’s care. For further information, please see our brochure regarding Life Interest Wills
What if I am the sole owner of my home?
The entire market value of your home will be considered, less any mortgages on the property and the costs of sale. However, the council is prohibited from including this value in the ‘means tests’ for 12 weeks after you move into permanent residential care (known as the ‘disregard period’). It is during this period that you must consider whether to sell your property or opt for an alternative arrangement such as a deferred payment agreement. This is a type of loan which can be arranged with your local council, where the council will pay your fees and reclaim the money once your home is sold or after your death. Your council will be obliged to offer this arrangement if your total wealth falls below the £23,250 threshold when disregarding the value of your home. This option gives you the freedom to deal with your property beyond the 12-week disregard period, and it can remain a family home well after your occupation of it. However, the council will usually seek to put a legal charge on your property which will involve interest accruing against the loan.
If you would like any further information regarding this article, please contact me on 01332 364436 or at s.hilliard@timms-law.com.
