If you or your spouse or partner need to move into care, the expense could use up a large part of your estate. While it is not lawful to deliberately deprive the local authority of funds, there are legitimate ways to protect your wealth so that it can be passed on to your beneficiaries when the time comes.
The cost of residential care varies depending on where you live, but is usually in excess of £800 per week, with care in a nursing home even more expensive.
This means that savings and investments can be very quickly used up, depleting your estate.
What the local authority will pay for
The local authority will only fund your care when your savings and assets fall below a certain level. If you have more than £23,250, then you will be classed as a self-funder and you will need to pay for your care costs yourself.
If you have between £14,250 and £23,250, then the local authority will require you to contribute towards your care costs. Once your assets fall below £14,250, the local authority will fully fund your placement.
If your needs are primarily health-based, because you have medical needs, then you may qualify for NHS continuing health care, or CHC. In this case, the NHS will pay for your care home place.
Deliberate deprivation of assets
There is a rule preventing people from simply giving away their wealth to secure funding from the local authority.
Deliberately reducing the amount of assets, to include money, property and income, so that an individual does not have to contribute towards their care, is referred to as deliberate deprivation of assets and is unlawful.
Where assets were given away with the intention of avoiding paying for care, the local authority can take action to recover them. This could happen even if the assets were transferred years before someone goes into care, as there is no time limit for deliberate deprivation of assets.
Safeguarding assets from care home fees
It is possible to protect your assets from being used to pay your spouse or partner’s care home fees however.
You can use your Will to plan for the future. By leaving your spouse or partner a life interest in your assets, to include in your property and income, you can ensure that they are provided for during their lifetime. By putting the assets in trust, the local authority will not be able to include them in their financial assessment and your spouse or partner will have the benefit of them for as long as they need.
By setting up a life interest trust in this way, once your spouse or partner leaves your shared home and it is sold, the portion of the property that was yours will pass under the terms of your Will, for example, to your children.
Alternatively, you can leave a property or share in a property directly to your children, but with occupation rights granted to your spouse or partner, meaning they can live there for as long as they wish to.
It is recommended that you speak to an expert to ensure your planning for the future is adequate to protect your loved ones.