Frequently Asked Questions & Answers
Frequently Asked Questions
How do I establish what care is needed?
If you, or a friend or relative think that there is a need for care, ask your local Social Services to carry out a care assessment (called a "section 47 assessment"). Once informed of a potential need for care Social Services must carry out an assessment, the purpose of which is to determine the type of care that would be most appropriate. Usually Social Services will consult the Health Authority and/or GP to ensure that the assessment is based upon the best possible information when establishing care needs .... more info
Do I have to pay for my care?
If you receive care at home through the Social Services, you may be asked to contribute towards the cost of it. There are no specific rules as regards this and you may be asked to contribute simply because your local authority considers that you can afford to.
If you need nursing or residential care in a care home you will have to undergo a financial assessment, which works to set rules. In this case whether or not you have to contribute depends upon your assets. Payment towards care costs is "means tested" with different upper and lower limits applying in different parts of the United Kingdom.
In England, only if you have total assets of less than £14,250 (2010/11) will your care costs be paid for you. If you have assets of less than £23,250 (2010/11) you may be entitled to some assistance from the state towards your care costs, but if your assets total more than this, you will have to pay the full cost yourself. The upper and lower limits in Wales, Scotland and Northern Ireland are different to this and are set individually for each.... more info
How does the means test work?
Following the Social Services assessment (see "How do I establish what care is needed?" above), if you are assessed as needing nursing or residential care you will be asked to claim any Pension Credit that you are entitled to and this will be taken into account when assessing what you can afford to pay. Normally you will be expected to pay all of your income towards fees, less a "Personal Expenses Allowance" (£22.30 per week in 2010/11) which you may retain for personal expenses. You will be allowed to retain some, or all of certain types of income. More common examples of income disregarded include: Disability Living Allowance mobility component; War Widows Special Payments; Christmas Bonus; Income from savings (which is not totally disregarded as it is treated as part of your capital). Income which must be partially ignored by the local authority includes:10.00 per week of War Widow, Widower or Disablement Pension; 50% of private pension where the pension is received by a married person in a home, provided the payment is made to a spouse that does not live in the same care home;
If you have capital of between £14,250 and £23,250 you will have to make a capital contribution of 1.00 per week for each 250.00 or part of £250 of capital between these figures.... more info
Is the value of my home taken into account?
The local authority and local security office sometimes use the same criteria, but on occasion the same thing is treated in a different way by each. Where differences of application apply the differences can be discretionary and so what follows can only be considered an indication as to how things work.
For the first 12 weeks (or until sold if the property is sold within 12 weeks) of permanent residential or nursing care the value you hold in your home will be disregarded by the local authority. But after that it will be treated as capital by both the local authority and local social security office unless it is occupied by your spouse, civil partner or someone living with you as if they were your spouse or civil partner, a relative aged over 60 or a younger relative who is incapacitated or a child under age 16 who is financially dependent upon you (local authority only), a lone parent who is estranged/divorced from the resident (local authority only). There is also discretion to ignore property if it is occupied by someone who gave up their own home to be a carer
What happens if my home is jointly owned, but not with any of the parties mentioned above?
The assessment has to take account of the market value of your share of the value you hold in the property. There are no concrete rules on this but where a property is jointly owned on the basis of tenants in common, it is often considered that full market value can only be achieved if all parties sell their interest at the same time . A percentage share ownership in a property that is not being sold has negligible market value and will often be disregarded in the financial assessment.... more info
Deferred payment agreements and legal charges where capital is tied up in property
If you are assessed as having to meet the full cost of care, do not have enough available funds to pay care fees, but do not want to sell the property, it may be possible to enter into a deferred payment agreement with the local authority. Under a deferred payment agreement (within limits) the local authority assists with the cost of care and the local authority is repaid when the property is sold. The local authority takes a legal charge on your property to secure the debt and you may be asked to pay the local authoritys expenses in doing this. No interest can be charged by the local authority during the life of the agreement, but the agreement expires within 56 days after you die. Local authorities do not have to offer deferred payment agreements but should you wish to enter into an agreement and your local authority refuses you should be given a written explanation as to why. Any refusal can be challenged through the authoritys complaints procedure.
A local authority can also place a legal charge on your property without consent to secure any debt that arises should you refuse to pay an assessed contribution.... more info
Can I give my home and/or other assets away to avoid having to pay for the costs of care?
If there is an immediate need for care, this is not recommended as under "deprivation of assets" rules the local authority is entitled to take assets that you have deliberately given away into account as though you still owned them. In the event that assets had been gifted away before any need for care arose, the onus would be on you to demonstrate that assets had not been given away so that you could not afford to pay for your care. There is no time limit as to how long after any asset is given away that a Local Authority can still take them into account and different local authorities take a different view on this. So even the suspicion by the Local Authority that this could have been the reason for disposing of the asset could mean that gifting assets away fails.
Notwithstanding this, it is also worth bearing in mind that if you did successfully gift assets away unchallenged and the need for care ever arose your choice of care would be restricted by what the Local Authority would be willing to pay for, which may fall considerably short of what you yourself would choose!.... more info
Can I reduce Inheritance Tax and still cover my care fees?
You only need be concerned about Inheritance Tax (IHT) if your assets come to more than the "nil rate band" within which no IHT is payable (£325,000 in 2010/11 for an individual, or £650,000 where on second death the original spouse had not made use of their nil rate band during their lifetime). So long as your assets (broadly your share of ownership in property, savings and all other assets) come to more than this, then you are always going to be paying for your own care and there will also be IHT payable upon death.
In essence, there are two ways of saving IHT. The first is to spend your savings to take them below the nil rate band. Ironically paying for long term care is a very effective way of reducing IHT, (IHT is only a 40% tax but long term care uses up 100% of savings!) but for most people that is not the point, as they want to pass more of their assets on to their loved ones and not end up spending them paying for care which by default reduces IHT.
The second way to reduce IHT is to gift assets away, (either to individuals or into a trust), during your lifetime and then to survive long enough for IHT to be avoided. Giving assets away can cause a direct conflict with Local Authority "deprivation of assets" rules and so has to be done with extreme caution. Purchase of a care plan to provide care fees payments "ring fences" care fees costs and, on larger estates, it is then easier to establish that, as the care plan has taken care of care fees, any IHT planning was not done for deliberate deprivation of assets purposes.
When it comes to IHT planning it is always the case that you should only give away what you can afford to, but it is possible to protect care fees payments and also do estate planning to reduce IHT. Inheritance Tax planning is complicated on its own but when linked with the need for care fees planning, even more so. For this reason expert financial advice should always be taken from an adviser skilled in both long term care and IHT planning before doing anything. All futurecareassured advisers are skilled in both long term care and IHT issues.... more info
How am I affected if it is my partner that needs care?
Social Services only have the right to means test the person needing care. Property occupied by a qualifying partner (see "Is the value of my home taken into account?" above) is disregarded as are their personal savings. In addition 50% of any private pension received by the person being means tested must be returned to their partner at home.
The Local Authority can ask a married partner remaining at home to contribute if they feel that they can afford to and for this reason it can make sense for married partners to each have single name savings accounts so that joint asset details are not provided to the Local Authority in a means test assessment. .... more info
If I am getting assistance towards care cost do I still get a choice of care homes?
In theory yes, but in practice this may not be the case! Your local authority will have set the required level of care needed by you and the maximum contribution they are willing to make towards it. Provided your care meets these criteria you can choose to receive care in a state home, a private home or one run by a charity. It does not have to be within your Local Authority area so if you wish to move to live near to family or friends, provided the level of care meets the criteria of the Local Authority assessing you, your Local Authority would normally pay your care costs. In practice Local Authority maximum contributions vary from authority to authority and are set so low that many care homes no longer accept residents wholly funded from Local Authority contributions.... more info
Can someone else "top up" what the local authority is wiling to pay so that I can live in a better home?
If you are having your care paid for by your Local Authority you are not allowed to top up from your own resources to pay higher care fees, but they will allow a third party who is able and willing to do so over the long term to do this.... more info
Who makes decisions for me about my care and paying for it if, through mental frailty, I am not able to make decisions myself?
Contrary to what you might expect, your next of kin are not automatically allowed to do this. If you have made no other arrangements and become mentally frail the Court of Protection will be appointed to manage your financial affairs. At modest cost you could set up a "Power of Attorney" authorising someone chosen by you to make financial decisions on your behalf by way of a Power of Attorney" providing authority for your Attorney to make your financial transactions for you.
A Power of Attorney is an important safeguard but futurecareassured strongly recommends that you obtain the advice of a competent legal expert before setting one up. When looking for a solicitor we would recommend that you use one that that is either a member of Solicitors for the Elderly or The Society for Trust and Estate Practioners.... more info
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