How to protect your home and savings from Care Fees
A customer of mine was diagnosed with a terminal illness in December 2105. Knowing that care fees could be up to £30,000 per year, he thought he better do something about his finances. He thought that if he had to go into a care home or nursing home he would have to pay care fees and he could end up losing the family home.
A glossy brochure dropped through his letter box one morning and it was advertising a company which said they can protect your house and savings from care fees.
My customer knew that medical care from the NHS is free but long term care because of mental or physical frailty has to be paid for. There is financial help from local councils but it is strictly means tested and if you home and savings are worth £23,250 or more, then you will have to pay all the care fees your self. If you haven’t got the money it will be taken out of the value of your estate when you die.
My customer contacted the company and they told him that they could protect his home and savings by putting them into a trust. A trust is a long establish legal device which holds assets on behalf of nominated beneficiaries, such as the family of the original property owner.
The trust would then own the assets and the company was saying that this would protect the assets from charges to care.
The marketing leaflets encouraged my customer to go to a lengthy seminar where he was advised on how to write the perfect will, how to avoid probate fees, how to avoid inheritance tax or claims on your estate such as care fees.
The theory is that once the family home or other assets are inside the trust they will be disregarded in the council’s means test and so will not be used to pay care fees.
A representative from these companies may then call at your house to do the paper work and to transfer assets into one of their trusts. These visits may take several hours.
Sadly, my customer died last year and never had to pay care fees as his cancer treatment and care was covered by the NHS for free. Because my customer was ‘ill’ his care was paid for by the NHS.
Deliberate Deprivation – Catch 22 of CARE FEES
If you give away your assets to avoid paying care fees to a trust or anyone else it is called deliberate deprivation and you will be assessed under the means test just as if you still owned them
The National Group of Council Assessment Officers whose job is to decide how much financial support people going into care are entitled to receive, says that ‘the motivation for giving away your assets is important. If you did it to avoid care fees then it is deliberate deprivation.’
The company selling the scheme says that If you can prove that the reason for your home being put into a trust as ‘being helpful for your family regarding administering the estate and after they have died. Then the local authority may not regard it as deliberate deprivation.
The right reasons and the right motivations to put your assets in trust
Prior to creating the trust you must show:
- You have not had a discussion with your doctor about needing care,
- you having had a care assessment and
- you have not forseen any danger that you are going into care.
There is nothing the local authority can do about it and that is the Care Act 2014. Could the local authority prove that you knowingly deprived yourself of assets. Local authorities may test the date of the trust against your doctors records.
But local authorities may use marketing material to prove deliberate deprivation.
The local authority want to know if avoiding care fees was a significant motivation in setting up a trust. so a trust set up many years before any need for care may prove difficult for councils to challenge, but if you are a bit older and worried about care fees beware!
These firms that provide these plans are unregulated and therefore there is no one to complain to if things go wrong.
Always seek advice from a solicitor about creating a trust.