How do I protect my home from care fees?

Care fees are rising and those requiring residential care with property or savings worth £23,250 or more are seeing their hard earned assets dwindle away faster than ever before. Couples across the country could protect a large portion of their assets from being used for care fees with just a few simple steps, but they need to act now.

We often hear from clients:

We’ve worked hard all of our lives – why should the Local Authority get it all?

With care costs rising dramatically, more people are losing the bulk of their savings, investments and property to the cost of care than ever before.

Research conducted by Prestige Nursing and Care has revealed that the average annual cost to stay in a residential care home has increased by £1,536 (5.6%) to £30,926 over the past year. The figures were based on a survey of 165 care homes, together with official government statistics.

The average rise is more than 10 times the £156 average increase in pensioners’ income over the same period. Pensioners earn, on average, £14,456 a year which would cover less than six months of care. This leaves a shortfall of £16,470 a year, equivalent to £317 a week.

In some areas, care costs have risen even more steeply – with London seeing the highest fees and the biggest increase. The average annual care costs in the Capital are £38,896, a 19% increase on the previous year.

Other areas with sharp rises include the East of England with a 12.2% rise to £37,908; the South West with a 5.8% rise to £35,360 and the East Midlands with a 10.6% rise to £28,860. With these figures far removed from a pensioner’s typical income, the elderly and vulnerable are having to dip into savings or borrow from family to meet the costs.

The rise in care home fees is at least partly due to the increase in the national living wage which has put care workers over the age of 25 on at least £7.20 an hour.

Protect your hard-earned assets now

If you need to move into a care home in the future and you have more than £23,250 in savings or assets (including the value of your home), you will usually have to pay for the full cost of your care.

If your savings or assets are between £14,250 and £23,250, you will usually have to pay a contribution to your care, with the Local Authority meeting the shortfall.

When your assets reach £14,250, the Local Authority will take over paying the fees for your care.

The rising cost of care means that people are seeing their hard earned assets eaten up by care costs quicker than ever before. With a house worth £213,927 (the average price for June 2016 according to the Land Registry’s UK House Price Index), if just one of you needs care, you would lose practically all of your assets in around six years, with nothing to leave to your children or grandchildren.

Fortunately, there are simple steps that couples can take to protect this from happening. Rather than leaving all of your assets to your partner in a Mirror Will, you can make a Care Fee Trust Will which allows you to leave your assets to your partner for life, and then to your children, grandchildren or whoever you choose.

This type of Will requires that the family home is held as tenants in common rather than as joint tenants. This means that each spouse owns 50% of the property, rather than holding the home together in a single indivisible share. If the property is not already held as tenants in common, we can easily make this change for you.

With a Care Fee Trust Will, your partner can use your share of the home during their lifetime and can even move house with your trustees’ permission. However, should your partner ever need care, the Local Authority cannot take your share to pay for care fees since your partner does not actually own it.

Couples need to act fast to take advantage of this loophole – once one partner has passed away, it is too late and the Local Authority will assess the full value of your estate and your partner’s estate when conducting a means test.

We offer a free pack which provides further information on Care Fee Trust Wills – click here to get your copy.

We also offer free appointments with our team, without any obligation. Call us on 0800 788 0500 or email – we have locations across the UK, and we will arrange an appointment at the office that is most convenient to you.

Act now: Get your free information pack!

Our information pack on avoiding care cost fees is completely free, with no obligation for you to contact us further. Just get in touch and we’ll email or post your pack to you.