How To Avoid Selling Your House To Pay For Care? Try Helpful Tips

How To Avoid Selling Your House To Pay For Care Try Helpful Tips

In the UK, the average price of residential care is rising. In reality, most people spend at least £35,000 annually on care, and that amount may rise to as much as £50,000 if nursing care is required. In reality, nobody has the right to make you sell your house in order to pay for care.

But regrettably, the majority of people will eventually have to foot some of the bill for care. Due to their significantly more complicated living circumstances, some people may even be required to pay the full cost of care.

What can you do to find out how to avoid having to sell your home in order to pay for care How to avoid selling your house to pay for care?

You can learn exactly how to do that by using this guide.

Can You Avoid Having To Sell Your Home To Cover Care Costs?

You won’t have to sell up to pay for care if you or your spouse/partner (or specific other people) want to stay in your house.

You have the right to live in your home for as long as you want, along with any qualifying dependents who share it. You cannot be pressured to sell to cover the cost of your care. A qualifying dependant could be any of the following who also lives in your home:

  • your spouse
  • your civil partner
  • your unmarried partner
  • a close relative over 60 (or incapacitated)
  • a close relative under 16 for whom you are legally responsible
  • your ex-spouse / partner if they are a single parent

In other words, you don’t have to be concerned about your loved ones becoming homeless just because you require care.

Understanding The Cost Of Care

You must first comprehend the costs of care if you want to know how to prevent selling your home to pay for care. The council will conduct a standard means test to determine your financial situation, accounting for the value of your home as well as any savings, investments, and pensions you may have. You will be expected to cover all of your care costs for the rest of your life if your combined wealth exceeds £23,250 ($40,000 in Wales and £27,250 in Scotland).

However, if your wealth is less than these amounts, you might still be required to contribute even if you qualify for assistance from your council. In many cases, it won’t leave much or anything at all for your family to inherit, whichever way you look at it.

Depending on the level of care needed, the individual’s needs, and preferences, care facility fees can range from about £30,000 to £60,000 annually. This is why it’s becoming more and more common to secure all of your assets in advance and learn how to keep your home from being sold in the event that you require care.

Common Misconceptions

You should get in touch with Will Power as soon as possible and well before any care is required if you’re considering how to avoid selling your home to pay for care costs. Making sure you are fully informed is essential because there are numerous procedures to follow in order to confirm that each process is legal and allowed.

Everything will be checked in your means test by the council, so when we’re asked about how to avoid selling a property to pay for care, it’s often easier to start by dispelling some myths and starting with a few things you can’t do:

Transfer The Ownership Of Your House

You cannot simply sign over your house or any other financial assets to family members or friends when you decide to enter a care facility in order to avoid paying care fees. There are proper ways to do this, which we’ll discuss later. However, you cannot do this haphazardly or even a few months before entering a care facility.

‘Gift’ Your Money Or Property Away Or Spend

In a similar vein, it is viewed with suspicion when someone gives away their money, assets, or other belongings. This includes giving large sums of money to family or friends, purchasing pricey or ostentatious items that aren’t allowed in your means test, engaging in high-stakes gambling, or selling your home for a pittance well below its market value.

Hide Your Wealth

Other questionable strategies for avoiding care costs include concealing the extent of your wealth by lying about your financial situation or illegally disposing of your assets. During your means test, any hidden funds or assets will be located and traced, and you will then undergo another test that takes those funds into account.

All of these instances fall under the category of intentional “asset deprivation.” Basically, all of your assets are intentionally given away or sold in an effort to lower your overall capital, avoid paying for long-term care costs, and improve your eligibility for council-funded assistance.

A Care Fee Will

If you’re asking yourself “how can Is my house protected from care costs?” it’s likely you already know your home is your most valuable asset. It runs the greatest risk of being sold in order to pay for your care because it contributes the most to your overall wealth. Because of this, making a Care Fee will is among the most popular practices.

A Care Fee will is a legally recognized and accepted—and frequently the simplest—way to safeguard your home for your family in the event that you enter a care facility. Although simple in theory, the procedure should not be taken lightly because it can be a difficult task. But doing so can safeguard at least 50% of the value of your house.

How Will A Care Fee Operate?

You can specify that you each want to “gift” your spouse your share in trust to them for life rather than to them directly if you own your home with your spouse or partner, whether or not you have a mortgage. To accomplish this, the property must be owned as “tenants-in-common,” which means that each of you will own an equal 50% of your house.

How Would It Be If My Family Was Still Residing There?

You don’t have to sell to cover the costs or worry that loved ones will lose their homes if other occupants want to stay in the house after you enter care. Qualifying dependants have the right to stay indefinitely, this includes:

  • your spouse
  • your civil partner
  • your unmarried partner
  • a close relative over 60 (or incapacitated)
  • a close relative under 16 for whom you are legally responsible
  • your ex-spouse/partner if they are a single parent

When Might You Have To Sell Your Home In Order To Pay For Care?

If—and only if—you move into a residential care facility without any qualifying dependents still residing there, you might need to sell your home to pay for care costs. Even then, you might be able to pay for your care with other funds, like savings or a private pension, and avoid selling (at least not right away). However, care home costs are high—between £30k and £40k annually—so most people in this situation might have to turn to their biggest asset, i.e. their home.

But what if you stay in your house or if you move into a nursing home, but your spouse or a dependent continues to live there? Then, what happens? Who bears the costs? It gets a little more complicated here, but it’s still important to understand how it functions.

Get Help With Paying For Care – How It’s Worked Out

If your financial resources, such as income, savings, etc.) are below a certain threshold, you will qualify for help with your care costs. A “means test” is used to evaluate this.

The value of your home will be taken into account for the means test if you (or a qualifying dependent) will no longer be residing in it. However, if one of the aforementioned will continue to live in your home, only your other assets will be taken into account.

Please take note that England will begin to experience social care reforms in 2023. Changes to the thresholds are among them. To learn more about upcoming social care reforms, read our guide. In the interim, the following remains true.

How To Avoid Selling Your House To Pay For Care Try Helpful Tips
How To Avoid Selling Your House To Pay For Care? Try Helpful Tips

Thresholds For Receiving Financial Help With Care Costs

England£14,250 – £23,250
Wales£24,000 (for care at home) £50,000 (for residential care)
Scotland£18,000 – £28,500
Northern Ireland£14,250 – £23,250

People with assets below the lower threshold are eligible for the maximum care fees support offered by their local authority (Note: this isn’t an unlimited amount, but should be enough to provide adequate standards of care). A sliding scale of financial assistance will be provided to those with assets between these two thresholds and none to those with assets above the top one.

You will undoubtedly exceed the upper limit and not receive assistance from the local authority if the value of your home is taken into account.

Is Receiving Care At Home Therefore Preferable?

The short answer is that receiving care in your own home as opposed to moving into a residential care home increases your likelihood of being eligible for financial assistance and does so sooner. First off, only your savings and other assets count toward the means test because your home is not one of them. Second, costs can be kept much lower for a longer period of time when receiving care at home because you only pay for the amount you require (and not for housing).

Thirdly, by beginning care in your home, you lower the possibility of mishaps and other problems that might force you into residential care earlier than you would like. In contrast, if you and your partner need care and eventually reach the point where you require 24-hour care in your home, the costs may be more comparable if not even greater than those of a care facility.

Available Funding Options Which You Need To Know

Follow Discharge From Hospital Into A Care Home

With effect from 1 September 2020, the The government has established emergency funding to cover the first six weeks of care (via the NHS). [This was reduced to 4 weeks from the 1 July 2021]. While the NHS evaluates their care needs, this time period is meant to give families some peace of mind.

If a CHC assessment is not completed during this time frame, the NHS will need to make ongoing arrangements to pay for care costs until one is completed and the results are communicated to you.

Read our blog: Transferred from the hospital to a care facility? Does your relative receive the six weeks of free care to which they are entitled?

Entitlement To Nhs Continuing Healthcare Funding

As mentioned above, the NHS should pay for all of your relative’s care (100%) through NHS Continuing Healthcare Funding if their primary medical needs are healthcare-related. As soon as possible after your relative has settled into their care facility, we advise you to request an assessment to determine eligibility for this funding.

Think Independent Financial Advice

You can seek independent financial advice to safeguard your assets using tools like an Asset Protection Trust or a care payment plan benefit policy that will cover the cost of the care facility on a monthly basis. Financial advice is not free, though, and we believe that most IFAs are unaware of the availability of NHS Continuing Healthcare Funding. Before a person has had an assessment to determine their eligibility for NHS Continuing Healthcare, no one can say whether they must pay for their care. Therefore, keep this in mind prior to giving an IFA money or a commission.

Enter Into A Deferred Payment Agreement (DPA)

If your relative is not eligible for NHS Continuing Healthcare Funding and is required by their Local Authority to contribute to the cost of their care, consider entering into a Deferred Payment Agreement (DPA) with them.

A DPA is a contract between you and the local authority that allows you to put off paying long-term care costs by using the value of your home or property as security.

The main goal of the DPA is to prevent people from having to sell their homes in order to pay for their care over their lifetime.

The LA will essentially enter into a contract with your relative (or their representative) and take over payment of the care home fees on their behalf in exchange for repayment at a later time. Consider it to be a bridge loan or a deferred debt. It is not cancelled; it is only postponed; repayment is still required.

When your relative passes away or their house is eventually sold, the DPA loan is typically repaid.

The Local Authority will typically insist on taking a first legal charge on the property to protect their loan, making sure there is enough security out of the sale proceeds to recoup the care fees they have paid to the care facility.

To ensure that the DPA is financially viable, they might insist on getting a recent valuation survey of the value of the property owned by your relative. This may be a separate charge or included in the administration fees that you must pay.

Usually, 70% to 80% of the home’s value is secured as the charge’s value. This margin is meant to account for changes in market value, the payment of accruing interest, the rising cost of care, and, ideally, to give the family some breathing room to cover any expenses out of the sale proceeds and still have some equity left over. In order to function and cover the projected (rising) cost of care, the DPA must be as financially viable for the Local Authority as it is for the family.

Additionally, Local Authorities may charge administrative and legal fees to cover the cost of establishing the DPA. Additionally, the loan may accrue additional interest (capped by the Care Act 2014 at the national maximum interest rate, which changes twice a year), which may be added to the principal amount borrowed.

Related Questions

Can I Gift My Property To Avoid Paying For Care?

Many people ruminate on the following thought: “What if I give everything to my children first?” Then the means test will reveal that I have nothing to my name!’ Unbelievably, the government has already considered this. The local authority will view this as a case of “deliberate deprivation of assets” and presume that you still own the home if, for example, you transfer the title to your home to one of your children just before you need to enter foster care. The same holds true if you were to unexpectedly give your children a sizable sum of money, which would reduce your savings. Unless the gift was given several years ago or gradually over an extended period of time, the local authority is still likely to include this money in your means test.

Simple living at home as long as possible, perhaps with the assistance of visiting caregivers, is a much wiser course of action.

Can I Be Made To Pay For My Own Care By My Partner Or My Kids?

In the event that you and your spouse have joint assets (such as shared bank accounts, other property under a joint mortgage) then this shared wealth will count as part of your means test. However, property that belongs only to your spouse (such as bank accounts or investments solely in their name) do not count as part of the means test. But once more, resist the urge to suddenly transfer all of your assets solely into your spouse’s name because this will be viewed as intentional deprivation.

The better news is that your children’s assets are never included in your means test because they are counted as entirely separate from yours.

Final Words

Before you begin to use assets or savings to pay for care, be sure to investigate what is ethical and what is not. Don’t be compelled to sell your home in order to pay for care; there are other options available.

Gratitude for reading is expressed.