Care Home Fee Planning – Protecting Your Home
One of the most common enquiries we receive from clients is in relation to protecting the family home from care fees. This can often be achieved by a couple preparing Wills in terms that provide that, for example, children inherit a half share of the property on the first death ensuring that the same is ring-fenced from future care fees of survivors.
In light of the Government’s recent announcement (as at November 2021) in relation to applying a cap on care fees, Samuel Dale considers whether it is still necessary to prepare a Will in such terms or indeed take any action to protect the home.
As at November 2021, the position is that an individual pays for all of their care until their assets drop to £23,250 at which point you pay a contribution towards the costs until your assets drop to £14,250. There is no cap on fees paid.
The “Relative’s Property Disregard” can ignore the value of an individual’s property from this calculation if, for example, a spouse, civil partner or dependent continues to reside in the same.
Care Home Fee Cap
The headline is that individuals will never contribute more than £86,000 towards the cost of care fees. As it currently stands no such cap exists.
It is important to note, however, that this cap does not apply to the entirety of the fees paid towards care.
Care home fees can vary significantly. Many care home fees charge in excess of £1,000 per week. Costs for food and accommodation itself do not count towards the limit. The cap only applies to the cost of “personal care”.
Additionally, following an amendment to the proposals, the cap only applies to the amount an individual pays themselves and not the amount from any state help received.
When care is required, a means assessment will be carried out. If an individual has assets worth more than £100,000 then they will have to pay all the care fees themselves. Once assets fall below £100,000, individuals would be able to claim a contribution from their local council. Said contribution will be means tested.
People with assets under £20,000 will not have to contribute to their care costs from capital albeit may have to contribute from income received. The “Relative’s Property Disregard” as referred to above will continue to apply.
When Will These Changes Be Introduced?
These changes are to apply from October 2023. Only care payments made after October 2023 will count towards the cap.
Is Care Home Fee Planning Still Relevant?
Whilst some firms provide a “one size fits all” approach to Will drafting and care home fee planning, Butcher & Barlow prides itself on always providing tailored advice to individual clients.
Under the current care home fee regime, it is not always appropriate to take measures typically used to reduce care home fee liability. For some, it will provide no benefit and create potential Capital Gains Tax liabilities for their beneficiaries.
Once the proposed changes are introduced, this position will remain the same. For some, no action will need to be taken. For others, the cap will have less benefit and there will still be a desire to maximise the inheritance left to their chosen beneficiaries.
Butcher & Barlow LLP
The Private Client team at Butcher & Barlow are available for advice and guidance with regard to the above. Our team is constantly engaging with all newly drafted legislation and as such are able to offer relevant advice to all matters related to protecting the future of you and your family. To book an appointment, please do not hesitate to contact your local office, or get in touch with Samuel directly at email@example.com.