It’s no secret that, in some instances, care home fees can be expensive. According to Age UK, the average cost of a care home place is £600 per week, and £800 per week at a nursing home. This equates to around £30,000 a year.
Under the current means tested system, if you have capital or assets worth over £23,250 you are responsible for paying the full care fees, known as self-funding (you can learn more about who pays for care here). For many, this is not disposable cash or savings, but the capital they have locked in their homes.
So, unsurprisingly, statistics reveal that, every year, 50,000 people sell their home to pay for care.
For many, this is not a decision made lightly. Many people would like the security of knowing future care home fees are paid and loved ones can inherit property one day. With that said, are there alternatives forms of care funding?
In order to pay for care, it is not unreasonable to try and protect your assets by selling property to family below market value or formally gifting them your home. However, if this is done shortly before you go into care, the government may see this transfer of deeds as a deliberate action in avoiding paying fees and the local authority will treat it as a case of ‘deliberate deprivation of assets’.
This means, even though a family member is now the legal owner of the property, it will still be seen as your home during means testing.
Furthermore, selling a house to a family member in the UK below market value is perfectly legal, but it could be seen as a way of avoiding capital gains tax and stamp duty fees, which could put you in hot water.
It’s a similar situation if you gift a large amount of money to try and reduce savings. This money will likely still be included in your means test.
Generally, if a transfer of property to another person or a trust is made 6 months before the move to care, or less, the local authority can automatically recover the property without needing to investigate and prove a reason for the gift. Only if a property or money was gifted years before entering care is it typically ‘safe’.
In most instances, the wisest strategy is to simply try and continue to live at home for as long as possible. This is where the help of visiting carers or support from friends and family can be extremely helpful.
If other inhabitants want to continue living in the home when you enter care, you do not have to sell to pay the fees and do not have to worry about loved ones becoming homeless. Qualifying dependants have the right to stay indefinitely, this includes:
Here at My Care My Home, we work with Shaw Lifetime Care to offer the Care and Home Inheritance Plan (CHIP) – an alternative source of care funding. Shaw will lease your property and take responsibility for ongoing management, allowing you to fund any shortfall between your income and care fees, whilst still maintaining full legal ownership of your property.
Using CHIP means that selling your home can be avoided, and it can still be inherited by your family after you are gone.
If you, or a loved one, are moving into a care home and do not want to deplete the wealth stored in property, learn more about CHIP today. Get in touch with My Care My Home to talk to a friendly expert about the available options.