Question: What is a deprivation of assets? If you have assets that take you above the threshold it is really important that you speak to an advisor and get financial advice about what you can do with your savings. Many people think that they can protect their assets from nursing home fees by just giving them away. 80 replies 5.4K views A nursing home costs more than £40,000 a year. If you still retained the property in your sole name on death, a grant of probate would be required to deal with it. Is signing over your house seen as a deliberate deprivation of assets? How much does a care home cost? The popularity and growth in these schemes is something we strongly suggest you consider if you decide to take care at home. Using Equity Release to avoid care home fees One option that many people look at is to use equity release to avoid paying care home fees. However, do get financial advice before you make any gifts so that you are aware of any potential consequences. Options include (but are not limited to) the following. This means that they don’t make any provisions financially in case they do need to access domiciliary or residential care in the future. One of the most regular questions we get asked is how to avoid selling your house to pay for care. Twice in the past few days people have asked me how it's going and told me how they found a way round it. You can find out more about each of these in our handy guides: However, this can also be a challenging prospect – as with so many options available, it can be difficult to know which choice to make. What are the different types of retirement accommodation? Paying for care homes is becoming more and more expensive with high inflation rates and the current economic depression and many people are faced with losing their home to pay for them. At the very least, protecting your assets from care fees is not possible if you have assets (including any property) worth over £23,250 collectively. Can you give away my money and assets to avoid care home fees? Be wary of trusts to avoid care home fees. It will have its own bank account and assets. If you live in England or Northern Ireland and have assets or savings worth more than £23,250 (£40,000 in Wales and £27,250 in Scotland), you’ll have to pay for your care home fees. To be clear, it is is still possible to put your house into a trust if the reason isn’t to solely avoid care fees. These rules enable the Local Authority to see-through any gift made by the person needing care if that gift is made with the actual or deemed intention of avoiding liability for care home fees. Deprivation of assets to avoid paying for care home fees. In the meantime, watch this video on how equity release works. We are often asked by clients whether they can transfer their homes to a trust to avoid paying care fees in the future. You can read more here about paying for care home costs if you feel you will need to pay these. Therefore, it is possible to transfer money and give gifts to avoid care home fees. The main ways to avoid paying full care home fees 1 Local authority funding: The amount of local authority support you can get, if any, depends on where you live and your savings, assets and income. Therefore, if you are on the wrong side of the fallout, it is possible that you could also lose your property. Call The Care Home Fees Specialists Now. Many people think about “how to avoid selling your house to pay for care” and decide that they will sign over their house to their children. "Many people do look to put their house into a trust, so they can avoid care fees and pass their home on to their children. So, if for example, you gave your family home to your children, then they could be responsible for meeting your care fees. So, in the example of giving your family home to your children, not only could you end up with the double whammy of having to pay for your care and also not having a house to fund your care costs. Those care home fees are, for most of us, a significant and unavoidable expense. – Gifting someone your money, both in and outside your family, – Transferring the ownership of your home to someone else in your family, so they aren’t included in the financial assessment for care fees, – Demonstrating unusual spending patterns and spending large sums on things you may not normally do so, – Buying things, such as jewellery or a car, which might otherwise not be included when you are doing a financial assessment. As mentioned above, if you purposefully give away your house, money, wealth, capital or property with the aim of ensuring they are not counted towards a financial assessment for care costs this could be classed as deliberate deprivation of assets. Your funds and assets: How much money do you have? Giving away your home is something that you need to think carefully about. Therefore, on its own, you cannot sell your house to avoid care fees unless you have some specific financial circumstances or if your family home has already been put in trust. Avoiding Care Home Fees. It can be a shock to many people when they find out they may have to pay over £100,000 for their care home costs. Leave your details below and we will contact you. Sometimes, a less risky approach to avoiding care home fees, and just giving the money and wealth away as a gift, is to put your house into a trust instead. You should not rely on this information to make (or refrain from making) any decisions. The majority of people own their homes Jointly which means that on the first death, the survivor would then own 100% of the full property value and this is when your home becomes vulnerable to attack from Care. Read about why you need a will and how you can make one. Avoiding care home fees - setting up a trust may help. Always obtain independent, professional advice for your own particular situation. Here is a video on how a care annuity works. Over 55 and UK home worth £70k or more? Get all the no-obligation information and advice you need about equity release. Sadly not. However, there have to be other reasons as to why you put your property into a trust and not just because you don’t want to pay your care fees. But, if the transfer is done a few years before you go in to care, then it could be possible. Download our FREE guide to help answer some of the key questions around care. This is different from putting your house into a trust to avoid care home fees. One of the best ways to avoid care home fees is to use equity release to fund your care. The residential home fees amounted to £30,000 a year and the matrimonial home was sold to pay for this. What counts towards deliberate deprivation of assets? This article was last updated on 1 January 2021. However, even in this instance, council-funded care may not meet your personal preferences or requirements. However, it won’t be counted if, say, your spouse or partner still lives there. Many of the schemes are well presented and the advice given is utterly convincing, but the reality is that many such schemes are presented by salespeople more interested in their earning potential than the welfare of their Client. So, any married couple can use a straightforward mirrored Will. Effectively this means you avoid paying nursing home costs yourself. You will, therefore, need to think about how you invest your savings to ensure they work as hard as possible for you. If you do find yourself having to find a care home, you can read more about it on this site. This is a very complex area, and you do need to seek advice. The longer the time period from you transferring the house to your children to you then going into Making the right decision at the right time can significantly increase the likelihood of you being able to retain your property, leave an inheritance and keep some disposable income behind for whatever you wish. You also cannot put your assets into a trust purely to avoid care home costs. Can you avoid care home fees? If the decision to shelter assets is made in a way that can be interpreted as a deliberate attempt to avoid care home fees, local authorities can challenge that decision. Try our equity release calculator to see how much you could get. If your local council concludes you have deliberately reduced your assets to avoid paying care home fees, they may still calculate your fees as if you still owned the assets. They are very similar to Life Interest Trusts. The good news for individuals requiring care and their families is that there are plenty of funding options on the table – provided the financial aspect of care is considered early enough. The difficulty with gifting assets is that there is no legal time limit in which the local authority can assume that you have ownership of the asset even if you have given it away. The local authority will ask about any previously owned assets, and take into account any reasons you’ve had to hand over assets or property to other people. The longer the time period from you transferring the house to your children to you then going into care the better the likelihood that this transfer will succeed in avoiding care charges. / 26 May 2015 When it comes to paying for care, it’s best to plan ahead. This is why sound, professional advice is so important. One told me her father put half his bungalow in her name so they couldn't touch that part. We have a directory of UK care fees funding specialists who can give you advice on care home fees and what the best options are for you to manage your money and wealth and not pay any more than you need to for your care. The quality of council care homes in your area (and the funding assistance on offer) may influence your decision. The simple answer to this is you cannot simply give your money away to avoid care fees. Deliberate attempts to reduce your money or assets could also be included. A trust is a legal entity in itself. The difference can be as much as an extra 50%. However, that said, there may be other very real reasons as to why you have to put your property into a trust. A local authority might, for example, successfully argue that a trust created a few months before an elderly family member is due to move into a home is deliberate avoidance, known as deprivation of assets. It could be tempting to give away or sell your house to relatives to avoid the fees to avoid paying the full cost of care. Despite this knowledge, very few of us consider the financial implications until it is too late. An advisor can help you look at your options as well as ensure you claim all of the benefits you are entitled to. ... is a complex issue not simply because of care costs but because the HMRC is keen to prevent people trying to avoid inheritance tax – so legal advice is essential. We are in the process of selling Mums house to pay her care home fees. Reforms are underway to reduce the likelihood of anyone with ongoing care needs losing their home and all savings. Having worked so hard to save, it can seem unfair that the money you have put aside to protect your family and invest in their future be used up for causes not chosen by you. You can find details of who to contact below. This includes savings, income, and your property may be counted as capital after 12 weeks if you move into a care home on a long-term basis. As long as either you or your wife were still living in the family home, the council would have to ignore the value of the home when working out your capital. Bankruptcy – You never know what may happen in the future. putting a house in trust to avoid care home fees. Looking for advice on care funding? However, it won’t be counted if, say, your spouse or partner still lives there. This is why early planning is required. Book an appointment to speak to a Trust specialist. As long as all the actions you take are legal, a consequence may be that you are able to avoid care fees. Essentially a trust is something that is legally recognised and can be enforced by a court of law. Likewise, if you set up a trust, the local authority can still approach the Trustees of the trust, irrespective of the time it was set up. The rules are often set out in the trust deed and rules, and these dictate how the trust will work. Unfortunately, the costs involved in moving into a And with the average care home charging £32,344 a year, it’s natural to worry about your finances as well. Family – Unfortunately, family members fall out all the time. There are often very legitimate reasons that you may have for wanting to give someone a gift via a transfer of ownership of your property. You may hope for help with care home fees from your local authority, but this is means-tested and thresholds are very low. Please read below. The extent of the power your Local Authority has can often be challenged as there is at times some subjectivity involved. Contact us for a free consultation and see what options you have. It can be both emotional and stressful. But if you’re thinking of avoiding care home fees altogether, there are some things you need to know. Therefore, mitigation rather than avoidance is the key. Many people do look to put their house into a trust, so they can avoid care fees and pass their home on to their children. Essentially, a scheme will allow you to borrow money against the value of your family house. – The 20 most important questions to consider when thinking about how to avoid care home fees or home care costs, – Protecting your assets from nursing homes and how this interacts with the expectations of your local authority, – Putting your house in trust to avoid care home fees and what counts as a deprivation of assets, – How much can you keep before paying for care, – If you can you dispose of your assets before going in to care, – How to decide what the best way is to pay for your care costs. The rise in care home fees is at least partly due to the increase in the national living wage which has put care workers over the age of … Typically, it is your children that are named as the Trustees. If you were fit and healthy when you transferred your assets, and could not have imagined needing care and support at the time, then it may not count as deprivation of assets. Once savings fall below £14,250, only income is considered for a means-assessment. If you, or a loved one, are struggling to manage at home, the thought of getting some kind of care can be stressful, not least because of the costs involved. In a previous article on this web-site dated 18 July 2014, I outlined the basic rules relating to liability for care home fees, including the anti-avoidance ‘deliberate deprivation of capital’ rules. The natural reaction of many people, when considering the future cost of Your prognosis: Is your health likely to stay the same or deteriorate? Due to this, when the Trust is set up, it is registered with HMRC. Find out about Saga customer benefits today. You can also see a video on the pros and cons of equity release on youtube. When you move into a care home, always check what is covered by the fee. However, you need to be careful. Copyright © 2013 UK Care Guide. The value of a person’s ‘notional capital’ will be included in their overall asset value when they have their financial assessment. The value of the assets that were given away is called ‘notional capital’. According to Which, there are almost 400,000 people in the UK living in residential and nursing care homes. I dont know if they still exist, as interest rates are so low, sothey are likely to be even more expensive, but after my mother had been in care for 2 years, we calculated how long the capital would last and decided to take one out deferred for 3 years, for peace of mind, knowing that if she lived a long time the care home fees would be paid. Q: I have a degenerative disease and am likely to need residential care within 10-15 years. Have a free consultation to discuss your circumstances and see what options you have: If you would like some help, please leave your details below and someone will be in touch. However Capital Gains Tax may well arise on afuture sale of the property and the local authority might seek to attack the arrangement as a ruse intended primarily to try to avoid nursing home fees as in Option 1. Unfortunately, there's no real way to avoid care fees unless you meet the strict means test for … In these types of cases, they may well challenge the reason behind using a trust. Avoiding care home fees: What are the consequences? People who pay for themselves – ‘self-funders’ – will be charged more for the same room in the same care home than if the fees were paid by the local council. Harriet Meyer The weekly cost will vary depending on the individual care home, where in the UK it is located, what type and level of care is required and whether or not your loved one would be entitled to any help with their care home fees. How much can you keep before paying for care depends on where you live in the UK. Not having a Will when you die means the government decides what happens to your money. With these figures far removed from a pensioner’s typical income, the elderly and vulnerable are having to dip into savings or borrow from family to meet the costs. Subscribe today for just £3 for 3 issues... Next article: Find out what you need to know before signing your property over to your children >>>. The Community Care Act 1990 imposed liabilities to pay long-term care fees on those in care-homes who aren’t entirely looked after by local authorities. You want to ensure that whatever decision you make is right for you – which is why information and professional advice is key. In a number of recent cases the clients in question had attended seminars held by companies promoting the use of “Asset Protection Trusts” or “Wealth Preservation Trusts” and were sceptical that the advice they had received sounded too good to be true. 2 July 2019 at 10:18PM edited 30 November -1 at 12:00AM in Deaths, Funerals & Probate. Plan ahead and read about how you can pay for your funeral ahead of time. How much you can keep before paying for care, and therefore the savings threshold for care home fees, differs depending on which part of the UK you live: If you have savings and assets above this, then it is likely that you will have to pay for your care. Could choosing one of care funding option mean that you lose your benefits? If that exceeds £23,250 in England and Northern Ireland (£28,000 in Scotland, £50,000 in Wales), no help with the cost of care is given. Care home fees are expensive and can quickly and significantly erode the assets the elderly person was expecting to pass to their children. This means that they are not included, by your local authority, in any calculation to determine the value of your capital when assessing nursing home costs. Many of the schemes are well presented and the advice given is utterly convincing, but the reality is that many such schemes are presented by salespeople more interested in their earning potential than the welfare of their Client. The impact of which, years down the line, maybe that the value of these assets are not counted when assessing whether you need to meet your care fees. If you are looking for ways to pay for long-term care, the Saga Care Funding Advice Service, provided by HUB Financial Solutions, can help you explore your options. You may be tempted to put your house into trust in order to avoid care home fees, but don't be too hasty. Costs for home care average around £15 per hour. Generally, if you live in the UK, you can get free medical care through the NHS. With many councils under financial pressure, they are proactive in looking for cases where people are using trusts to avoid fees. https://www.thisismoney.co.uk/money/pensions/article-7116867 Most of us work very hard over the years to buy our own homes and build up our savings for our retirement and would like to leave a “little something” for our children and grandchildren after we are gone. Avoiding Care Home Fees: Is It Possible? It can be both emotional and stressful. This allows you to take money out of your home and avoid having to pay care home fees. Therefore, whilst it may seem appealing putting property into a Trust to avoid care home fees, it is something you need to be very careful about. Likewise, you may be thinking about inheritance tax planning. Pros and Cons of Equity Release and the pitfalls, How Much Can You Borrow From Equity Release, What Happens When You Die With Equity Release. The above saving thresholds include any savings and income, such as a pension. Crucially, seek expert advice and make sure you know the rules around care costs to avoid falling into any traps and losing more than necessary. Get free access to your credit report for 30 days with Experian's trial offer. This is essential if you have complex affairs. Let someone else have the responsibility of maintaining your house. HOWEVER, there are some circumstances where it may be possible to give away your assets. Your choice will depend on your personal financial situation and preferences – but there are a few key things you’ll need to consider. On the surface, it might seem like the perfect way to protect your children's inheritance, but local authorities are increasingly wise to these type of schemes, with teams in place to ensure residents are not using them to get out of paying rising care costs. assessment for care costs, therefore avoiding the need for it to be sold. There is a risk that this could be seen as a deprivation of assets. During this period she had incurred £150,000 in care home costs (5 years x £30,000) and the value of her Estate at death which passed to the children was £100,000. She has a degree in English language and literature from Manchester University and has been writing and reviewing products for a number of years. How Can a Trust Help You Avoid Nursing Home Costs? We work with with Quadrant Estate Planning for them to bring you their market leading later life planning support. It is estimated that one in four of us will be living in a care home during the final years of our life. Generally, if you did the transfer a few months before going in to care them this is likely to be seen as depriving yourself of your assets. However, you should note that if you do enter care within 6 months of gifting your assets and property, the council can still send the bill for the care costs to the person that the gift was gifted too. Please do not delay, please call us now 0203 653 0625, email reception@steenelaw.co.uk or complete a Free Online Enquiry and we will be delighted to help you. They are also known as ‘Property Trust wills’. Avoiding and mitigating care home fees is possible in certain circumstances. Deprivation of assets means that you have deliberately reduced your overall assets to avoid paying for care provided by your local authority, including care home fees. One option that many people look at is to use equity release to avoid paying care home fees. Working out the cost of care in a care home for your loved one can be very confusing because so many different factors are involved. If you transfer your property to trustees for them to hold on trust for you, and your intention was wholly or mainly to avoid the payment of care fees in the future, then you risk the local authority treating you as still owning that property when assessing your financial contribution to care costs in the future. However, if you need to move to a care home or nursing home, you must pay for the care fees yourself. Many of our clients ask us if there is a way to avoid paying care home fees, and fortunately with the right expert advice, Trusts can be set up to your advantage, to provide protection planning for your assets against paying any unforeseen care home fees in the future. Funerals can be very expensive. Paying for Care Homes using Trust Funds Therefore, we strongly recommend that you get financial advice. 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