Don’t Fall for Care Home Fees Avoidance Traps!

With an ageing population and the increased fear of having to sell the family home to pay for care, many people are being exploited by commercial firms offering risky schemes to supposedly protect the home from care fees.

When a person requires care, usually the Local Authority will assess that person’s income and capital to decide how much they should pay towards their care.  This is known as “means test” or “financial assessment”.  If a person has more than £23,250 in capital in England, then the person is responsible for paying their full care fees.  Many properties are over this value and this is what causes people to panic and enter in to these risky schemes.  Stop!  Don’t Do It!

Some commercial firms make a lot of money selling avoidance schemes that are claimed to protect the property.  They offer the schemes to people, usually the elderly, and they cost thousands of pounds and probably will not work!  They give the doom and gloom story of care fees and will tell you that thousands of people are forced to sell their homes and it is taken by the care home or government, but this is not true.  Some people may have to sell their homes, but the figures are not as huge as these companies make out.

The main risky scheme offered by these firms is that you place your home into a trust during your lifetime.  They sell it to you as being a legitimate legal avenue and the theory is that you will no longer own the property, the trust will, and therefore it will not be counted as an asset for the means test.  Unfortunately, what these firms fail to tell you is that there is a rule about “deliberate deprivation of assets”.

What is Deliberate Deprivation of Assets?

Under the CRAG rules (Charging for Residential Accommodation Guide), if you take any steps to dispose of an asset that you own and the motivation is to increase your entitlement to public funding, then the asset is still considered to be owned by you and will be assessed for care fees under the means test.

Therefore, if you enter into a scheme, as detailed above during your lifetime, then although the trust owns your home, it will be still taken into account for care fees means test and the local authority can refuse to pay your care fees.  This means that the house may still need to be sold to pay your fees, or your family may have to help to pay your care home fees.

Unfortunately, with these schemes, you are just lining the firms’ pockets with your money and still end up paying care fees.  The advisors for these schemes are usually sales people, with no substantial legal training and often do not realise the scheme they are selling may not achieve its purpose.  Many of the firms selling these schemes are unregulated and therefore you have no one to raise a complaint with, or ability to reclaim your money.

The sad thing is that many people entering into these schemes will never know whether they work or not, as the majority of people will never need a care home.  However, for those that do end up testing them, they may find that they are very disappointed in being exploited by these commercial firms.

What are the alternatives?

Many people never require a care home and will die at home or in hospital.

For those that do need a care home, often the house will not be considered.  If your spouse or partner lives in your house then the property will be disregarded whilst they live there.  If you have a relative that is over 60, under 18 or a disabled person who is classed as dependent then again the house will be disregarded.

It also depends on why you need care in the first place, as to whether you will be required to pay.  If your primary need for care is a medical one, which is known as “continuing health care” then this can be funded by the NHS and this can mean that they pay a contribution or they can cover the full cost of the care, depending on your personal circumstances of why you need care.

If you are considered to pay for your own care, then the house does not necessarily need to be sold.  You may be able to afford the care payments from your income alone, or you may decide to rent out the home to pay the fees.  We would advise that you speak to a SOLLA financial advisor if you are deemed to pay for your care fees, as they may be able to offer advice on the best way to use your funds and may be able to mitigate the impact of the care fees on your estate.

A couple can opt for a Property Trust in your Will, this is not caught by “deliberate deprivation of assets” as it is not a lifetime gift, but a death gift.  It does not take place until a death happens and therefore you may be able to safeguard 50% of your property value for your family.  Speak to us, for more information.

Should I just pay care fees?

You may opt to pay your care fees, as it will allow you more control on the type of care home and care that you receive.  Even if you are receiving some Local Authority funding for your placement, your family can opt to pay a “top up” fee so to get a better standard of care.

You can choose to sell the home if it is empty, as it may be too much for your family to manage the rental of the property or upkeep and maintenance.  If you do sell your home, it is not that the government or care home takes the whole proceeds.  These are paid into your bank account and then you can invest or manage it as you please, and pay care fees monthly.  We would advise you to seek financial advice if this is the option you choose, as a SOLLA advisor can provide specialist advice to make the funds last longer.

The moral of the story is….”if it seems too good to be true, it probably is”

Our advice is “don’t enter into any risky scheme, and get it checked by a Solicitor before doing it”

Ginette McCaffery

Wills Probate & Trusts Solicitor

Article Dated 28/03/2024