Care Home Fees and Property: Do I Have to Sell My Home?
A common concern for many is whether they will have to sell their home to pay for care. There’s no law stating you must sell your home if you enter care. Instead, the law outlines specific allowances and assesses your ability to pay. For example, the first twelve weeks of your care costs will be free. Also, if a dependent still lives in your family home, it will not need to be sold. Otherwise, if your capital exceeds £23,000, you will pay for your care. While you can use any means to pay, such as pension payments, most people find selling their home necessary. Understanding care home fees and property is crucial for future planning.
Protecting Your Home: Two Main Options
To protect your home from being used for care home fees and property assessments, you have two main options. First, you could give your home away, for example, to your children. Secondly, you could place the home into a ‘Family Trust’. Both options offer distinct benefits and disadvantages. Let’s compare them using an example: Mavis.
Mavis is an 89-year-old widow. She lives alone in her home, valued at £200,000. She paid off the mortgage long ago but holds no other assets. Mavis is in reasonably good health. She wants to live in her home for the rest of her days, or as long as possible. However, she realistically knows she may one day need to move into a care home. She worked hard all her life and paid her taxes. She would like to leave her home to her two children, Stuart and Roger.
Option 1: Gifting Property to Avoid Care Fees
Let’s first look at the benefits of Mavis giving her home away now to Stuart and Roger:
If Mavis’s health deteriorates and she needs to enter care, she no longer owns her home. Therefore, authorities will not consider it when assessing her care fees. This can be a straightforward way to manage care home fees and property concerns.
And the disadvantages:
- Stuart and/or Roger might divorce, become bankrupt, die, or fall out with Mavis (or each other). Since they own the home, they may decide its fate against Mavis’s wishes.
- Someone else may have a legitimate claim to it. For example, divorcing spouses or a dependent upon their death. This might force Mavis’s home to sell before she is ready to leave.
- If Social Services prove the principal reason Mavis gave her home away was to avoid paying care home fees, they can set aside the transfer. Mavis would then still pay for her care home fees. This is often called ‘deprivation of assets’. For more details on local authority rules, consult Age UK’s advice on care costs.
Option 2: Using a Family Trust for Property Protection
Now let’s look at the benefits of Mavis setting up a Family Trust:
If Mavis’s health deteriorates and she needs to enter care, she no longer owns her home. It is in trust. As such, authorities will not consider it when assessing her care home fees and property contribution.
The house remains in trust for Stuart and Roger’s benefit. However, Mavis retains the right to live there for the rest of her life. This applies irrespective of whether Stuart or Roger pre-decease her, get divorced, or fall out with her. For more on how trusts can secure assets, visit our Family Trusts Explained page.
And the disadvantages:
- Mavis can only consider this option if her home has no mortgage.
- Setting up a Family Trust involves a cost.
- If Social Services prove the principal reason Mavis put her home into the trust was to avoid paying care home fees, they can set aside the trust. Mavis would still pay for her care home fees.
If Mavis’s estate were larger, Inheritance Tax considerations would also apply. However, if you are healthy and unlikely to go into a care home within the next six months, taking specialist legal advice on the ‘Family Trust’ option may be money well spent. For general guidance on care funding, the MoneyHelper website provides useful information.
Seek Expert Advice for Your Care Home Fees and Property Planning
If you would like to find out more information on care home fees and property options, please contact our experts today. An experienced lawyer can help you better understand your options and develop a successful estate administration plan. Reach out to Probate Forms on 020 8150 2010 or explore our Estate Planning Services.
