Care fees and your home: what you can and cannot protect

Few subjects cause more worry than care fees. People who have worked all their lives to own a home fear it will be sold to pay for care, with nothing left for their children. Some of that fear is justified and some is not. This guide explains how the system works in England, what your home does and does not count for, and what can honestly be done.

How care fees are assessed

If you need care arranged by your local authority, you will have a financial assessment, often called a means test. It looks at your income and your capital. If your capital is above the upper limit set by the government, you pay the full cost of your care. Below the lower limit, the authority pays, though your income is still taken into account. Between the two limits you make a contribution. The limits are set by the government and change from time to time, so check the current figures on the official website.

When your home counts

Your home is ignored in the assessment while you are receiving care at home. It is also ignored for residential care if certain people still live there, including your spouse or partner, a relative over sixty, a relative who is incapacitated, or a child under eighteen you are responsible for.

Where none of those apply, the value of your home is usually included in the assessment after the first twelve weeks of permanent residential care. Many people in this position use a deferred payment agreement, which lets the fees be paid later from the sale of the home rather than selling it immediately.

Giving assets away

People sometimes consider giving their home or savings to their children to put them beyond the reach of a care assessment. Be very careful. If a local authority decides that you gave assets away deliberately to avoid care fees, it can treat you as if you still had them. This is known as deliberate deprivation of assets, and there is no time limit on how far back the authority can look. Giving away your home while continuing to live in it also raises other problems, including the risk of losing it if your child divorces, goes bankrupt or dies before you.

What a property protection trust can do

For couples, there is a legitimate and well established option. By owning the home in distinct shares and leaving your share into a trust by your will, you can let the survivor live in the home for life while protecting your share for your children. If the survivor later needs care, only their own share is assessed. This is not avoidance of anything; it is simply a sensible arrangement of what belongs to whom. Our guide to property protection trusts explains it in detail.

What a trust cannot do

A trust will not protect the whole house from care fees for the survivor, and anyone who says otherwise is overselling. A lifetime trust of your home, set up while you are well and with no care in prospect, may or may not be treated as deliberate deprivation depending on the circumstances and your reasons, and it carries real risks of its own. Treat any promise of a guaranteed way to protect everything with suspicion.

Lasting powers of attorney

Care is also a time when a lasting power of attorney earns its keep. Without one, your family will struggle to deal with your finances or your care arrangements if you can no longer do so. If you are thinking about care fees, make sure both types of LPA are in place.

Talking it through

We help families across Norfolk and Suffolk put sensible protection in place: mirror wills with a property protection trust, and lasting powers of attorney for both of you. We will tell you plainly what these arrangements will and will not do, and we will point you to a regulated financial adviser for anything that turns on your own finances.