Person going into care home thinks they have avoided selling their house to pay fees?

[LindorDoubleChoc]

A distant relative has just sadly gone into care (dementia). He is not married but has a long-term partner with whom he has two adult children.

His family seem to think he won't have to sell his property to pay for the fees because "he has put his house in his son's name". I'm trying to think what this means and surely if it were that simple everyone would do it?

Are they misunderstanding the system? Or how could they have achieved this? They are in England.

If you settle assets on a lifetime trust, then you no longer own that asset and the land registry should be updated. If you provide for a will trust of the house, that trust doesn't come into effect until the will comes into effect (i.e. death of the testator). So it depends on approach. The tax consequences will generally be quite different between those two examples.

The house remains within the estate for iht in this case (gift with reservation), but of course it's still potentially useful if the main object is to get assets to DC early (assuming tax implications are fully understood).

I didn't discuss the tax implications with them. They just told me that they had set up a trust with both their DC being the trustees.

As we worked with social services a place was found in a home where she can stay when her half a million has gone..she has Alzheimer's but is physically well...so that will only last 6 years ish...if we'd found the home by ourselves she'd have been asked to leave..

But what happens if you sell your house to pay for a care home and the money runs out ? at 7k a month, if a person stays there for 3 years that's £252k, so when the money has gone who pays that 7k a month or are you moved to a council run care home ?

You will be subject to funding rules. LA will pay what it will pay. Care home accepts it, the family makes up the difference or you find somewhere cheaper.

Some care homes are run on a basis that if you have been self-funding for a specified minimum duration, then they guarantee not to turf you out if the money runs out even if they would normally require higher fees and don't accept "new" residents without topup. My grandmother chose a place to move into when the time came specifically for that important feature.

I thought the property was disregarded if a partner lived there? So it might not be the fact that the son bows owns it that means it's 'safe' but because the partner legitimately lives there?

The property isn't disregarded but it doesn't have to be sold. The LA will put a "charge" onto the deeds of a property which is owned by someone receiving care home accommodation but where the house is still occupied by a partner. Nothing happens until the surviving partner dies or requires care themselves, or the property is sold. By co-owning with a member of the next generation the charge could be deferred for longer - interest would accrue but usually the interest rate is less than house price inflation - but would still be due eventually.

Thank you for your support...
Fortunately we worked with social services so when Mum's half a million pounds is gone she'll be able to stay there.. she's physically well so she could be in her secure dementia unit for a long time...
Out Dad died after a very long illness and we were very sad but we are all devastated by what is happening to our wonderful Mum.. knowing how safe and well cared for she is has softened me and my siblings 'loss' of our inheritance..
I'm not surprised tho by a lot of these comments..not many made by people who 'deprived' themselves of assets and regret it or indeed any on adult children who've spent their parents money and now realise the care those parents are getting..
It's easy to say 'I'd never pay that' ..'I want my kids to inherit ' etc ..but when you're actually faced with it...well.. it's very different...

The property is disregarded if a partner lives there. It doesn’t form part of the financial assessment.

Someone mentioned the other day that their care fees were capped at 22.5 per cent of their house value. So one country makes it work

The way round that is increase inheritance tax for everyone, not take everything from a random sample of 1 in 5 (those needing care) and leave everyone else untouched.

God the misinformation on this thread.
They don’t put a bloody charge on the house if a spouse or dependant adult live there.
It is completely disregarded.
Get your facts right before commenting.

I'd be fully in favour of that but which party would dare suggest it. Quickest way to electoral annihilation.

I think 7 years must elapse before the house is no longer considered for care home fees. I also think there were some new rules whereby the people in whose name the house was put must pay rent to the previous owner and show that they have paid rent. No, this is a widespread misapprehension. What you are talking about is removing the house from liability for inheritance tax. It has absolutely no relevance to care home fees. There is no time limit on how far back the LA can go in assessing deprivation of assets.

I do think it is unfair when nearly all of a house's value can be taken to pay for care fees. I think it would be much fairer if every property over a certain value was liable for a small percentage to be be paid into a government account ring-fenced exclusively for care fees. Political football. This has been suggested, as was a scheme where everyone of retirement age paid into insurance for care. One was labelled “death tax” and kicked out, the other “dementia tax” and kicked out.

@Daisychainreactions See above. What you’re talking about is IHT. It doesn’t apply to care.

Yep, you can also get a disregard for a a close relative over 60, or with a disability, a dependant child under 16 cared for by an occupier of the home, and for a carer who gave up their own home to care for the person going into care. The circumstances are regularly assessed so if circumstances change the house will become available for assessment - for example if the qualifying occupier moves out or dies. And the disregard only applies to that particular home, so if it’s sold to allow the occupier to downsize, any remaining unused funds from the sale would be assessed for care fees. Not sure whether the LA could claim fees back if the home is sold once the person in care dies, given that there is no charge attached.

Just wondering about these rules. If a child of the homeowner, ie the elderly person needing care, is renting privately but decides to move into the house with their children for a better quality of life, and one of those children is registered disabled, does that count as an exemption? (ie a grandchild). Or does it have to be the disabled, adult child of the homeowner?

If it’s at the point that a care home is needed, I imagine the council taking a very dim view of their family moving in, even at full rent it’s unlikely to cover care fees.
If they’d been living there for years it would be different.
Can’t see it being ok but proper advice is needed.

Age UK have an excellent fact sheet on funding care. It answers most of what’s been asked here.

The rules specify that it must be a close relative of the person going into care, either over the age of 60, under the age of 18, or disabled. They must also have occupied the home before the adult went into care, and it must be their only home. The reasoning behind it is so that a vulnerable relative wouldn’t be made homeless by the sale of the house. The LA’s have the power to disregard a property into which a qualifying relative has moved after the person enters care, but they would have to have a sound reason for doing so, and if they’re found to have made themselves intentionally homeless in order to benefit, the property won’t be disregarded and they would have to apply for a deferred payment agreement.

If the relative qualifies for an exemption, then they can still move in to the home after the person goes into care, but there must be a good reason - for example that they would be homeless otherwise.

I wonder if coming to the ned of a tenancy agreement qualifies as 'homeless'? I was just thinking this as there is such a mad scramble for rentals at the moment, so many landlords selling up. A lot of families are really in crisis when it comes to housing, why shouldn't they live in a relative's empty home? A deferred payment option might be a good idea.

'The end' not 'the ned'. I really should go to bed.

Anyone moving in would still have to be vulnerable according to the exemption conditions though - the exemptions are there to stop potentially vulnerable people becoming homeless as a result of the sale of the home, and the rules are strict. A deferred payment option also has its’ drawbacks. There are arrangement fees and interest is applied to the loan, which reduces the funding pot for the person in care. And when that person dies, the LA expect the care bill to be settled within 90 days. I expect there’s some leeway when the funds can only be realised from the sale of the home, but it’s still a lot of pressure to be put under, potentially at short notice.

So if someone goes into care but they co-own the house with another elderly relative then the local authority can’t put a charge on the house at all? What if the house was then sold at a later date? I’ve got an aunt 90+ living with my cousin who is 70+; if aunt goes into a care home my cousin says she’s been told they will charge 2% interest from that date until she sells up so she thinks she’ll need to sell
very quickly. I don’t know where she’s got this from but she is adamant.