Following the long awaited announcement on the changes to residential care fee contributions, homeowners with higher value property are being drawn to routes to protect their assets, but experts are warning them to watch out for expensive schemes that will not work.
From 2017, the total amount that the elderly will have to pay in care home fees will be capped at £75,000 for personal care, but not accommodation and food, after which the Government will step in and pick up the bill. The amount is equivalent to a stay of about two and a half years in residential care, which is longer than most people need.
Anyone with a home or assets worth less than £123,000 will get some help towards the costs – up from the current £23,250 means-testing threshold. Under the current system, anyone who requires care must pay all the fees out of their own money, unless and until they qualify under means testing.
With rising house prices, means testing is likely to force many people to sell their home to fund fees, unless they have planned in advance, which can help protect at least part of the value of the family home to keep it out of the means testing equation.
Said Kalpa Prajapati, private client expert with Greenwich-based solicitors Grant Saw LLP : “Anyone with property should start with a well-drafted will, which puts shares in the family home into trust. By changing ownership from “joint tenants”, which passes one share automatically to the other on death, to “tenants in common”, each partner can leave their share to who they like, which opens the way to ensuring that half the house will pass to their children.
“This is a simple, safe and proven method of limiting one’s liability for residential home fees by ring-fencing half the value of the family home and it’s particularly useful where remaining assets will be less than the limit.”
But she warned: “People are being targeted by companies who offer lifetime trust schemes which they claim will help avoid care home fees altogether, although many of these could prove useless as well as costly. Charges are as much as £4,000, but by trying to place all of their assets into trust, people run a big risk that their actions will be deemed to be deliberate “deprivation” of assets, and they could end up still having to pay fees.”
This is not legal advice; it is intended to provide information of general interest about current legal issues.