A): Currently, the cost of an average residential care home is around £26,000 per year. If nursing is required, this figure could rise to over £36,000. Local authorities can provide some funding support, but eligibility is means-tested. Only those with assets of less than £14,250 (including property) can get all their care funded. Above £14,250, your father will have to make a contribution towards the costs. If he has assets in excess of £23,250, he will have to fund the full cost himself. However, even if he was to qualify for full local authority support, there could still be a shortfall between the actual care home costs and what the local authority is willing to pay.
Q): How can I meet the costs of my father’s care home fees?
A): You can meet the costs through existing savings and investments or your father can sell his property and utilise the proceeds. The local authority will usually disregard the property from the cost of care for the first 12 weeks. They may agree to continue funding past this timescale, but they will look to recoup the costs when the property is sold. Alternatively, you can consider an annuity-based Care Fees Plan. This involves making a one-off lump sum payment to a Care Fees Plan provider and in return they pay a guaranteed income for the rest of your father’s life. The income is currently received tax free if paid directly to the care home. It makes sense to seek advice from a qualified Independent Financial Adviser if you want to consider a suitable Care Fees Plan.
Q): Can my parents put their house in trust to myself and my sister in order to remove it from their estate, thereby potentially avoiding future care home fees?
A): Your local authority will probably ask questions about historical property ownership. If it deems that the property was put into trust in order to avoid paying care home fees, they may still include it in the means-testing process. Using trusts is a complex issue, not simply because of care home fees but because the Inland Revenue is keen to prevent people avoiding inheritance tax, therefore, always seek legal advice first.
Q): If my father goes into a care home, will my mother be forced to sell their home to pay the fees?
A): No. If your mother remains living in the property it will not be included in the means-testing process. However, half of their joint savings will be included, plus assets your father owns solely.
For more info regarding care home fees, please contact us for an initial no-obligation consultation.