October 1, 2022
With the average cost of living in a residential care home in the UK each week at around £704 and £888 for a nursing home, many people might be concerned about how they will pay for their care in their old age, especially if they still make regular financial gifts to loved ones, or leave a legacy for their family in their Will.
If you need care you will be responsible for paying for it in full if your capital is above £23,250. If you have less than this it is likely you will get some financial help from your local authority, but this will be subject to means testing.
There are some circumstances where your own home won’t be taken into account for the means test such as if you need short-term or temporary care. If it is a permanent move into care, your home won’t be counted in a means test if it is still occupied by your partner or former partner (unless you are estranged), unless your estranged or divorced partner is also a lone parent, if a relative who is aged over 60 is living there, if you have a disabled relative living there or if it is occupied by a child of yours aged under 18.
Using your tax free annual gift allowance is one way to make sure your loved ones can benefit financially each year throughout your life, but if you want to make larger gifts, you need to think about the consequences this could have and if it leaves you or your loved ones exposed to care home fees or Inheritance Tax liability.
In 2017 a local authority was criticised by The Local Government and Social Care Ombudsman for its refusal to pay for the care home fees of an elderly woman after it found out she had made regular cash gifts to her family after being admitted into a care home.
The woman had gone into residential care aged 80 after a stroke and for a number of years she had paid for her own care funded through the sale of her house. Once her assets fell below the £23,250 threshold her family applied to North Yorkshire County Council for financial help which was granted pending the completion of a full financial assessment and it began paying the fees which extra rate charged by the home on top of the standard local authority rate.
When the council conducted the full financial assessment it was discovered the woman had been making annual cash gifts to her daughter over a number of years which amounted to nearly £75,000 in total. The Council decided this was a deliberate deprivation of capital under the Charging for Residential Accommodation Guide rules and it stopped paying her care home fees. In addition, it also demanded the repayment of nearly £7,000 it had already paid for her fees.
The family paid this back but made a complaint to the Ombudsman about the council’s behaviour. It decided the council had taken action without completing a full financial assessment simply assuming the gifts were a deliberate deprivation of capital. This was not backed up by any evidence and they had not taken into account the proven fact that there was already a pattern of gifting before the woman went into a care home and there was no evidence of her haste to dispose of her assets. The council could provide no other evidence to show why it had declared the gifts were made with the intention of avoiding care home charges.
The council were ordered to apologise, reassess the situation properly and repay any fees the woman was entitled to.
If you would like any advice about your finances and financial planning for your older age, please get in touch today.
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