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Paying for Your Care Home Fees - Have You Considered all Your Options?

on Monday, 17 July 2017.

With average nursing home fees now costing around £1,000 a week and care homes reaching £700*, the question of paying for care in old age has become an increasingly hot topic.

The government’s proposal, ahead of June’s general election, to introduce changes to funding for those requiring care in their own homes, dubbed the 'dementia tax' by its critics, led to rows and a swift U-turn. So what is the current situation, and what do you need to know if you are approaching old age or are concerned about your future care?

What Does the Law Say About Care Home Fees?

If you have capital in excess of £23,250 (in England), you will usually be expected to meet the full cost of accommodation and personal care in a residential home. The value of your home may be taken into account in assessing this figure. However, if your spouse or another close relative is living in the property, then the value of the home may be disregarded.

Those with capital of less than £14,250 will not be expected to use this to pay care home fees, but they may be expected to contribute income towards their care.

If I Give Away My Assets, Will the Local Authority Pay My Fees?

Giving away assets to your children or other relatives may seem like a good idea but if the local authority decides that the reason you cannot fund your own care is deliberate, you could be charged with 'deprivation of assets' and you may still be assessed as if you still owned the assets that you tried to give away.

What About a Nil Rate Band Discretionary Trust?

Until recently, a common way to reduce the estate on the first death was for both spouses to create Wills containing nil rate band discretionary trusts (NRBDT), ie a trust up to the value of the amount that can pass free of inheritance tax on the first death, currently £325,000. Funds in these types of trust cannot be claimed by the local authority for care home fees, but they can be paid to the surviving spouse if needed.

However since the introduction of the Residence Nil Rate Band (RNRB) in April 2017, extra care is needed when creating such trusts. The RNRB may provide for an additional £100,000 free of inheritance tax on death if you are leaving property or the proceeds of property to direct descendants.

You should take specialist advice if you are trying to save care home fees, to ensure that this tax break is not missed and to ensure that you do not fall foul of the deprivation of assets legislation.

For more information, please contact Mary McCrorie, in our Private Client team, on 0117 314 5368.

*Report by analyst LaingBuisson May 2017.

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