What are care homes entitled to?
If your total assets exceed a set amount you will be responsible for paying all of your care costs, if your assets fall below this figure then you can have assistance from the government to fund your care.
The assets you can hold depend on where you live. You will need to pay for your own care home costs if your assets are higher than:
England and Northern Ireland - £23,250
Wales - £24,000
Scotland - £26,000
You will qualify for some help if your assets fall below these figures. The support offered will vary depending on what value of your assets fall under the threshold.
For more information on how your support is calculated you can visit the Independent Age website.
If, during your care, your total assets fall below the threshold you will need to be reassessed and should be entitled to government support for future care costs. The amount you receive will still vary depending on your level of income/pensions and the value of your remaining assets.
How are you assets worked out?
Broadly speaking there are three categories when assessing your assets, these are:
Savings - Deposit based accounts, not stock market linked.
Investments - Stock market linked savings, these are usually long term accounts.
Property - Your home or any property you own.
If all of your assets are jointly held then only 50% of the value will be including in your assessment, for example:
You and your partner own a property worth £250,000, hold a joint savings account with a combined value of £30,000 and joint investments collectively worth £25,000. As a couple, your total assets come to £305,000, but only £152,500 will be seen as your individual assets.
If you decide to sign all of your assets over to your partner or a third party then you can reduce your assets to fall beneath the threshold.
This is not an easy task to do as the government will not offer any support if it is seen that you have purposely disposed of your assets just to claim on government help. It is worth noting that most local authorities have different rules so make sure you don't assume that one rule covers every area.
What powers do care homes have?
There is a misconception that care homes have all the power when dealing with your eligibility for funding, and the ability to make you sell your property. This is not true. Your local government dictate the rules of how you fund your care home costs.
Can you give your money away before entering a care home?
Yes, you can give your money away and sign your house over to someone else before you go into a care home and they will not count towards your own assets when working out how much you will need to pay the care home.
The implications of signing most of your assets to someone else are that you will no longer "own" those assets, and therefore don't have any legal right to them.
The safest way to approach this is to sign over your assets to someone in Trust. This is a legal agreement that you are still the owner of your assets but you're the person or people you put in Trust will take care of your assets.
The other benefit of placing your assets in Trust is that there is no red tape in regards to inheritance tax deductions and dealing with probate. For further information on inheritance tax, read the guide How Is Inheritance Taxed?
You can visit the HMRC website for more information on Trusts.
What happens if you run out of money - does the state pay for your care?
If you run out of money and can't afford to pay your care home fees, you can apply for support from the government, similarly to how you would have if you didn't have the funds to pay from the start.
You will be means tested and your assets will be recalculated to determine whether you fall under the support threshold.
What if your other half still lives in your property - can they force a sale?
If you have a partner who still lives in your home then the property's value will be excluded from your asset calculations in terms of care home fees.
This means that the care home or local authority can't force a sale and your property will remain untouched for as long as your partner lives there.
This rule also applies for some other close relatives, for a full list on who can remain in your property you can visit the Independent Age website.
If you have arranged a transfer of equity into your partners name then they have legal control over the property and can sell it on their own.
Can they take money from your relatives if you've given money to them?
If you have gifted or given your money to your relatives then those funds cannot be means tested towards your assets, and cannot be recalled should you the care home demand more money.
This may seem like the safest approach, but you need to consider what will happen to your funds should your relatives suffer financial issues and your money is taken into account as their assets.
How much will care cost you?
The cost of a care home can build up to the tens of thousands, but each care home has its own costs. To find out the costs of your nearest care home visit the Carehome.net website.
How can you reduce the cost?
The best and most cost efficient way of preparing for the cost of moving into a care home is to seek financial advice. You will be taken through the a step-by-step financial guide associated with your time in a care home and what happens to your assets.
Read our guide The 5 Step Plan to Finding an IFA You Can Trust with Your Money for more help choosing a suitable financial advisor.
If you are looking for the most cost effective care possible you can also consider care in your home, for more information visit the Independent Age website.