One of the most frequently asked questions our Wills, Trusts & Probate team receives is if there is anything a person can do to protect their assets from having to be used to fund any future residential care they may require.
Whilst there is no definitive answer to this question, generally speaking, one option might be to gift your assets to your family during your lifetime whilst you are fit and well. That might be savings, or it might be property. If you were to do this, the starting point would be that you would not own the assets you had given away and therefore they would not form part of your capital.
Gifting assets and residential care fees
When gifting assets to your family during your lifetime, the general rule here is that if you give your assets away and then move into care, you no longer own the assets and therefore they can’t be required to be used to pay residential care fees. Subsequently, you would have less capital and therefore once this gets to below the financial limits, the Local Authority will have to step in.
However, in some instances, this might not be the best option depending on your individual financial and family circumstances, and your aims and objectives. It is best to consider the following things first:
Do you need to?
Your income might be sufficient to cover most or all of your likely residential care fees. It’s important to consider:
- If you move into care and are self-funding, you are likely to be eligible to receive Attendance Allowance. This is a non-taxable, non-means tested welfare benefit that currently pays out either £2,893 or £4,321 per person per year depending on the rate awarded.
- Also, if you move into care and your property is then unoccupied you could rent out your property with the rental income being used to help pay your care fees.
- Or, you could sell your property and invest the sale proceeds with the investment income being used to help pay your care fees.
Would the ‘gift’ actually ever be of benefit to you?
There is often a limit to how much of a person’s assets they are comfortable to give away during their lifetime. It is necessary to think about how much capital you will be left with even if you make the gifts. This might be more than enough to see you through a stay in care, particularly once you take into account your income.
Do you want to?
You should consider that, if you were to need care in the future, the choices of accommodation and services available to you may well be greater if you were to keep all your assets, and were therefore self-funding for longer than if you were to gift your assets and had to rely upon Local Authority funding.
It is possible, if you ran out of money to pay your own care fees, that the Local Authority might require you to stay in or move to a care home which you would not choose for yourself. This may limit the options available to you as to the type and quality of your accommodation and services.
Also, if you were in receipt of Local Authority funding but wished to stay in a care home or receive services over and above what the Local Authority will agree to pay for, it is possible for a top-up contribution to be paid to cover the additional cost of this.
However, under the present law, you cannot pay your own top-up contribution and this would have to come from your family or elsewhere, and therefore, it would be up to them to agree whether or not they were prepared to pay this at that time.
Nadia Faki is an Associate in our Wills, Trusts and Probate team.
Planning for residential care can be a potentially daunting and confusing process. At Nelsons, we can ease the worry of residential care fees by helping you with your residential care planning. Our team of experts specialise in helping people take the right steps now to safeguard the future for them and their loved ones.