Funding Nursing/Care Home Fees

[chocolatecake346]

DM has been declining for a good long while and we are currently considering care options. Her health is such that she is likely to require nursing care or at the very least an 'extra care' home. She has multiple health conditions and not sure her body will cope for too much longer.

She lives on her own, has no savings or income, apart from DLA and and a tiny pension (£150 per month) but does own her bungalow (value approx £200k).
Given the rules about funding I understand the house will have to be sold and it will be quickly sunk into paying fees.

She worked hard all her life, lived incredibly frugally and is now understandably upset that she is unlikely to be able to leave anything to myself, DB and her DGCs.

I'm not sure what my question is but just wondered if anyone has been in a similar position or there are options we haven't considered to in anyway protect even a little of her asset?

I fully appreciate that social care fees need to be means tested and funded appropriately; it just seems so sad that the one and only asset she worked so hard to acquire will be totally depleted after a couple of years.

They'll leave her with £14000. Once her capital is down to £23000, the Council will start contributing. When she's down to £14000, the Council will pay the fees in full. She'll still have to pay for "extras" (like toothpaste, hairdressing, someone to cut her toenails) so that will whittle away at the £14000 if it can't be accommodated within her pension.

While she's completely self-funding, she'll be able to apply for Attendance Allowance (if you can get that as well as DLA, you may not be able to). While she's completely self funding she'll still get DLA, but that will stop once the Council is contributing.

Should she not be getting Pension Credit on such a low income?

The thing you need to be careful of is "deprivation of assets" - if she does anything (eg put your name on the bungalow deeds so that it becomes half yours) that can be construed as divesting herself of assets to avoid paying for a care home, she will be treated as if she still had those assets. Local authorities are getting very aggressive about this, and delve back into the records a long way.

If you haven't yet done it, set up a Power of Attorney, so you and DB can manage her affairs if she becomes incapable.

It's a very unfair system. It looks fair, because people will say "why should the state pay if they've got money to pay themselves" "they can't live in the house so why shouldn't it be sold?" "Why should I as taxpayer fund other people's children's inheritances?" But it's completely arbitrary - your neighbour dies from a heart attack and his children inherit the house and all the savings, your other neighbour has been enjoying her "savings" during her lifetime and has her care paid for, and you are diagnosed with dementia and your children inherit nothing. And because there's no limit on care costs, you cannot insure in the way you would for, eg, your house burning down.

And it's not as if we don't pay for other people in other ways - eg tax relief on private pensions, so the more well off you are, the more the taxpayer is contributing to your pension.

There are some advantages to self paying - for example, she can move into assisted living accommodation when she wishes rather than when the Council thinks she needs is, so you don't have a long phase being run ragged while she doesn't quite cope in her own home with 4 half hour care visits a day.

It’s more hassle but there the option of renting out the bungalow to fund the fees. If rent doesn’t cover then council usually will pay the difference but this will accumulate a debt and they will take a charge over the house so that it can be sold when she dies and the debt repaid. This means you retain the asset (and any potential increase in value that may happen), also it’s an ongoing source of income rather than a finite pot of money that will dwindle to £14000 relatively rapidly. Something to think about.

Thank you...
Having dig a bit deeper, it appears DM does get Pension Credit and both elements (care and mobility) of DLA. Not sure what they total but would they be offset against fees?

I understand about Deprivation of Assets; so am
I right in thinking DM couldn't even give the DGC a few hundred now, in case suspicions are raised?

Hadn't thought about renting out her house, maybe an option but I think it would only raise about £700 pm.

The DLA will stop once she is in full time care. Renting out her home is a lot of hassle if you have never been landlords before. You have to arrange things like, annual gas safety checks, Insurance, management fees, if you are handling things yourself and repairs. In addition the hassle of tenants not paying.

It is only worth doing if it covers the whole cost of her fees. I suggest you speak to AGE UK. They have all the latest info and produce excellent leaflets

Unless it covers the whole fee, I mean.

Apologies, I have learnt that the DLA rules have changed and are now still paid to care home residents.

Thanks @FLOrenze we do need to think very carefully and I also need to confirm the fees are in the local places.

It does make me cross, you don't have to contribute if you have no assets but for someone who hovers just above the threshold you have hand over everything you've got

In answer to your q about a few hundred to GC, there is no hard and fast answer but I don’t think that would cause any problems, it’s things like signing over houses/ substantial savings etc that would trigger alarm bells over deprivation of assets. If she is on the same page as you in this regard then you should encourage her to give generously to family members at birthdays and Christmas!

The rental income would have to be significant to cover care home fees so it worth looking into how much it costs as often the monthtly fee is more than anticipated

I wonder what the max could be to gift the DGC before the council started sniffing.

Another question just occurred.
When a property is sold because a person is going into care, are the proceeds retained by that person and fees invoiced or do the proceeds just have to be handed over?

Another question just occurred.
When a property is sold because a person is going into care, are the proceeds retained by that person and fees invoiced or do the proceeds just have to be handed over?

You'll be invoiced. You don't hand over all proceeds.

Thanks @Snozzlemaid
Weekly, monthly bills?

That would depend on the individual nursing or residential home as the contract would be with them if you're self funding.

Also, when she moves into the nursing home before the house is sold the Local Authority will pay the fees and put a charge on the house. So when it is sold that money is legally bound to be paid back to the LA.
So that amount would need to be paid off immediately after the sale to the LA.

Age uk have some helpful advice here and you can contact them for advice https://www.ageuk.org.uk

DGC a few hundred now, in case suspicions are raised?

If you read the small print of a tax return, any tax payer in each tax year, you can give away £250 to Sam many different people as you like and you can give £3,000 to anyone (one or or split it across more people) who didn't get £250.

You can carry forward £3000 from last year if it wasn't used.

You don't even have to report these to HMRC so we have taken this as reasonable amounts to give away.

https://www.gov.uk/inheritance-tax/gifts

Finallyhere but tax and gifts aren’t the same as deprivation of assets. It would be down to LA to decide where there has been deliberate deprivation of assets and I’ve tried previously to get a handle on what might constitute this and not succeeded. It would also depend on timing, a healthy, active elderly person with no likelihood of needing care giving gifts and falling suddenly ill or unexpectedly needing to move six months later, hard to argue that its deliberate deprivation...getting very frail and likely to need care within weeks or a few months, more likely to be seen as such!

At a guess I would say that sudden large gifts would attract attention, but if £150 per family member were given each birthday and Christmas from now on and continuing that wouldn’t be unreasonable?

Having dig a bit deeper, it appears DM does get Pension Credit and both elements (care and mobility) of DLA. Not sure what they total but would they be offset against fees? While she is completely self funding, the are income and available to her to help pay care home fees. Once the LA starts to fund, she will no longer get DLA. I don't know the situation with Pension Credit.

We’ve assumed that continuing the pattern of gifts is ok but starting new ones might attract attention. Mil has advanced dementia now so all her finances are sorted out by her dc under POA. They have stopped giving themselves presents from her but have continued cash to the dgc for Christmas and birthday as it’s what mil used to do when she still had capacity. She doesn’t need LA funding yet - but it may be needed as her funds are rapidly depleting so we are conscious of keeping to the rules.

Mrswobble I think it would be very hard (and harsh!) for LA to claim that as deprivation of assets!

You haven't said if she has any care going in now.

We wouldn't normally place someone straight into res care without trying dom care at joke first.

If she has a small income and not savings the local authority will find the dom care.

Re allowable tax gifts I think you could put away £4.5k of her cash to provide for a funeral and £3k as a gift to you for last years tax year 19-20 and &3k as a gift to another family member for 20-21. Then maybe £250 for each grandchild , partner. My DM has 10 x £250 each year and the £3k gift rotating to individuals.
We rent DM’s house to help fund her care bill but the council has a charge against the property