Following the long awaited announcement on the changes to residential care fee contributions, homeowners with higher value property are being drawn to routes to protect their assets, but experts are warning them to watch out for expensive schemes that will not work.
From 2017, the total amount that the elderly will have to pay in care home fees will be capped at £75,000 for personal care, after which the Government will step in and pick up the bill. This does not include accommodation and food costs which is additional and ongoing. The amount is equivalent to a stay of about two and a half years in residential care, which is longer than most people need.
Anyone with a home and/or assets worth less than £123,000 will get some help towards the costs - which is an increase from the current £23,250 "means-testing" threshold. Under the current system, anyone who requires care must pay all the fees out of their own money, unless and until they qualify under means testing.
With rising house prices, means testing is likely to increase the number of people who sell their home to fund fees. This is unless they have planned in advance, to protect at least part of the value of the family home to keep it out of the means testing equation.
Anyone with property should start with a well-drafted will, which puts shares in the family home into trust. This coupled with changing ownership of the property from "joint tenants" (which passes one share automatically to the other on death) to "tenants in common", each partner can leave their share into the trust, which opens the way to ensuring that half the house will pass to their children on death.
This is a simple, safe and proven method of limiting one's liability for residential home fees by ring-fencing half the value of the family home and it's particularly useful where remaining assets will be less than the means tested limit.
People are being targeted by companies who offer lifetime trust schemes which they claim will help avoid care home fees altogether, although many of these could prove useless as well as costly. Charges are as much as £4,000, but by trying to place all of their assets into trust, people run a big risk that their actions will be deemed to be deliberate "deprivation" of assets, and they could end up still having to pay fees.
