As we grow older, many of us will naturally worry about the possibility of having to sell our own home to pay for residential care costs, especially if your property is co-owned or you would like to have a legacy to leave to your children.
Below we look at the ways in which the financial capability to fund your own care will be assessed by the local authority, and the likelihood that this may mean you will need to sell your home.
What is the local authority means test?
A means test is a financial assessment undertaken by the local authority as to how much someone will be liable to pay for any residential care that they might need. Generally, the local authority will help to pay for these costs if you are assessed as having capital of less than £23,250.
The means test will take into account how much money you have by way of savings, investments, pensions, benefits or property. Regard may also be had to anything you used to own, thereby preventing people from selling or giving away their property to mitigate any liability for care fees prior to being means tested.
If the local authority thinks you have reduced what you own on purpose, for example, by selling your home at a knockdown price to your children, this is likely to be seen as a 'deliberate deprivation' of your assets where your fees may still be calculated as if you still owned the property in question.
What if I jointly own my home?
If you jointly own your home and your spouse or partner is still living in it, or if any other close relative resides there aged over 60 or incapacitated, the value of your property will not be taken into account by the local authority.
Even where you jointly own your home with someone else but any one of the relevant exemptions do not apply, only your share will be taken into account.
It is also worth noting that your home will be excluded from the local authority calculation where your caring arrangements mean you will remain living at home, or you only go into residential care on a temporary or part-time basis.
What if I solely own my home?
If you are the sole owner of your home, the entire market value of your property, minus any mortgage and sale costs, will be factored into the financial assessment of your means to pay for your own care. That said, you would still be given a period of 12 weeks after you move into permanent residential care, where the local authority will entirely disregard the value of your house.
It is during this period that you will need to consider whether to sell your property or, instead, to opt for an alternative funding arrangement.
What alternative funding arrangements are available?
If the value of your home, or your share of the property, is to be included in any financial assessment, you may want to consider what alternative funding arrangements are available to avoid the sale of the property.
There may be various options available to you, including a deferred payment agreement with the local authority, an immediate care fee plan or even an equity release scheme. However, there are various practical and financial risk factors that must be taken into account, so it is always best to seek expert advice.
For further advice please call 01253 629300 or email info@blackhurstbudd.co.uk
Legal disclaimer
The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law and should not be treated as such.
Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.