Wills, Probate, Tax & Trusts : Care Home Funding

Care Home Funding

Rising Cost Of Care Home Funding

Funding long-term care for the elderly is one of the greatest challenges facing your family today.

As more people live longer, cash-strapped councils are becoming less able to pay for nursing home fees – despite having a legal obligation to care for the elderly.

So pensioners face having to sell their homes or borrow money to pay for care: leaving their children and grandchildren with little or no inheritance.

Find out what you can do to stop this happening to you. Contact your nearest Coles Miller office.

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Take A Holistic View Of Your Needs

As experienced Solicitors for the Elderly, we recommend stepping back and taking a holistic view of the challenges facing you and your loved ones as you grow older.

Don’t just think about care home funding in isolation. Consider other factors that may be an issue:

  • Have your family circumstances changed in recent years? Does this mean that your will is overdue for review? Have you made a will? It is one of the most important legal documents that you will ever draft.
  • Is your estate likely to be subject to Inheritance Tax? Careful tax planning is best done early to take full advantages of the tax reliefs offered by the government. You may also wish to consider setting up a trust to ringfence your assets and shield them from any taxes that would otherwise be levied on the estate.
  • Is dementia or lack of mental capacity likely to affect your family? If so, we recommend you think about setting up powers of attorney to save the added cost of having to apply to the Court of Protection for a deputyship.

It pays to think about all the matters together because any one of them can affect the others. Trusts in particular can help you to reduce the amount of money that you would otherwise have to pay in care home fees.

Care Home Funding Rules – Local Authority Means Tests

The rules governing local authority funding for care home places can be complex. Interpretation of the rules can vary between councils.

Decisions on funding involve social services assessments and also benefits such as Income Support, Pension Credit, Attendance Allowance and Funded Nursing Care (FNC)/ Registered Nursing Care Contribution (RNCC).

But the key factor is whether you own assets (including your home) worth more than £23,250. This figure is called the Upper Means Test Level.

Local authority means testing will include your income (pensions, benefits, earnings) and also your capital (savings, investments, property in the UK or overseas, any business assets).

The local authority can refuse to pay your nursing or care home fees – even if you exceed the £23,250 threshold by just a small amount.

This £23,250 Upper Means Test Level applies to England and Northern Ireland> In Wales it is £40,000 (from April 9 2018). In Scotland it is £27,250). If your savings and investments exceed the threshold then the local authority will expect you to fund your own care until your assets drop below the level.

However, if a spouse or relative aged over 60 is living in your main residence then it would be automatically excluded from the calculation.

There is also a Lower Means Test Level – £14,250 in England and Northern Ireland (£40,000 in Wales, £17,000 in Scotland).

If your assets are beneath the Lower Means Test Level – and you have been assessed as needing permanent residential care – then the local authority will provide maximum funding based on its standard cost of care.

Bear in mind that this may be only a basic level of care. It may not cover the cost of the residential care home that you or your loved one would prefer.

Discharge From Hospital: Your Right To Continuing Healthcare

Before any elderly patient is discharged from hospital, they should be assessed for their Continuing Healthcare needs.

In theory, that means the NHS Clinical Commissioning Groups (CCGs) responsible for funding care should be liable for the full cost of long-term care for the patient.

But public finances are coming under huge pressure because of the growing numbers of people living longer and requiring long-term care.

So CCGs are trying to find ways to avoid having to do these assessments – so they can then pass patients on to the local authorities (which is when means testing takes effect).

Last year NHS England issued CCGs with new guidance about hospital discharge and Continuing Healthcare assessments. It urged them to reduce the number of these assessments.

So families are coming under pressure to take their elderly relatives out of hospital before they can have these formal assessments. The NHS is counting on the fact that most people won’t know enough about their rights under the system to demand care for their loved ones.

We advise you to stand your ground against the NHS and demand that your elderly relative is properly assessed, according to their rights.

What if the Continuing Healthcare assessment goes against you and the CCG refuses to find care? There is an appeals process.

Appealing the CCG’s decision can take a long time because it is in the NHS’s interest to delay (or avoid) funding care. But you can succeed if you can prove that the need is for healthcare rather than social care. 

Need further legal advice on this? Contact us for further information.

Using A Trust To Reduce The Impact Of Care Home Fees

Care home fees can be very high compared with what you’re used to in your own property. They can range from £250 to £1,000 a week.

But there are ways of ringfencing some of your assets to protect them from the cost of care fees. One method for couples is a pair of Property Trust Wills. They help husbands and wives to provide for each other when one of them passes away.

When one person dies, their share of the property is held in trust for their children (or any other beneficiaries) while allowing their partner to live in the property for their lifetime. This enables people to provide for the next generation while at the same time ensuring that the surviving partner has a roof over their head.

However, a life interest trust like this will not protect the family estate from having to pay Inheritance Tax (IHT) so it pays to take expert legal advice. If you’re thinking of setting up a trust, make sure you choose the one that best suits your circumstances.

Find out more here about trusts.

Remember that local authorities are very short of cash due to years of cuts in funding from central government. So councils are becoming very strict in the way that they interpret the care home funding rules.

They could try to withhold funding if they think that a trust has been set up purely to avoid paying care home fees (rather than for more altruistic reasons) – especially if the trust looks spurious or hastily conceived. Careful consideration, proper planning and expert legal advice are always vital with trusts.

Giving Away Your Assets To Drop Below Means Test Level(s)

You could just give away your assets…offload them in an attempt to drop below the means test thresholds. It sounds simple enough but – as ever – there’s more to it than that.

Local authorities will look very carefully at gifts when considering whether or not to provide care home funding. They will examine the ‘ownership trail’ of the assets and decide whether or not you have deliberately deprived yourself to avoid paying fees.

That doesn’t just include overly generous gifts or putting property in someone else’s name. It can also include sudden spending sprees such as extravagant holidays.

Eagle-eyed council officials will look in detail at the timing and amount of the gift/spending and also the suspected motives behind it. Local authorities hold the purse strings and they have a duty to ensure that public money is spent prudently.

It is also worth bearing in mind the HM Revenue & Customs (HMRC) rules on Inheritance Tax (IHT) with regard to gifts. Unless the gift took place seven years before the death of the giver, it is still liable for IHT.

Get Expert Legal Advice On Care Home Funding

Planning ahead is vital when it comes to care home funding – the longer you leave it, the fewer choices you may have left under local authority rules.

We can help you with the careful planning needed to make the best provision for you and your loved ones.

Coles Miller is officially accredited as Dementia Friendly by the Alzheimer’s Society. Our team also includes members of the Society of Trust and Estate Practitioners and Solicitors for the Elderly.

We take the time to get to know you and your affairs so we can advise you how best to achieve your aims and ensure that your family and finances are properly looked after in the future.

Contact Coles Miller solicitors today for expert advice. Request a call back.

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