Selling a home to pay for care

Delphie

Registered User
Dec 14, 2011
1,269
From the link

"Over the next 12 months, 62,000 families will have to stump up typically between £35,000 and £40,000 in fees, according to the Government’s own figures, because the individual entering into care has savings and property worth more than £23,250 and so will receive no support from the state."

I can't quite see what's changed really... Could someone do a 'For Dummies' explanation for me?
 

nitram

Registered User
Apr 6, 2011
19,692
North Manchester
In the next 12 months nothing will have changed but in April 2016 the £23250 becomes £27000 which is increased to £118000 if any share of property is included in the assets.

The whole article seems badly written , for instance it mentions allowable gifts under IHT regulations which have nothing to do with assessment for care and could well be regarded as deliberate deprivation of assets.
 

Delphie

Registered User
Dec 14, 2011
1,269
Thanks nitram. :)

I get the increase to £27k but I'm not sure I understand the £118k (very tired today, so apologies if it's obvious!) Is it that the threshold will then be £118k as long as the assets include property, as in, only once your assets are at that level or lower only then will LAs get involved? Anything over £118k and you're still self-funding?
 

nitram

Registered User
Apr 6, 2011
19,692
North Manchester
Yes , now the limit is £23250 including any property ,next year it will increased from £27000 without property to £118000 with property.

However the LA should get involved even if the assets are above the upper limit.

If self funding and the LA have assessed and agreed the level of need from April 2016 any fees paid will count to the £12k annual hotel cost and also the £72k lifetime care cost.

From this April LAs are supposed to be pro actively identifying and assessing all self funders so that they can open their account in April 2016 if the assessment says they require residential care.

Care fees will be split into the two components and costed separately. The amounts recorded against the two caps will not be what the home charges but will be the LA's assessment of a fair charge, eg if the home charges £600/Wk for the care element but the LA estimate is £400/Wk the £72k cap effectively becomes £108K. A similar calculation will apply to the annual £12k cap on hotel costs.
 

MeganCat

Registered User
Jan 29, 2013
356
South Wales
I'm probably being thick but if the difference between income and fees stack a debt up against the home presumably that debt is called in at some point and the home has to be sold anyway - just later. So what's the advantage? Or is that it? A longer deferment
 

Delphie

Registered User
Dec 14, 2011
1,269
Thanks again nitram, it's as I thought. The more I read about it the less I'm impressed. That's why I'm questioning my understanding. After all the fanfare I expected something clearer and of more obvious benefit to the majority of self-funders.
 

Kevinl

Registered User
Aug 24, 2013
4,774
Salford
I don't really understand it either, if I have to pay "bed and board" where does it all end? Let's say I was I was the archetypal little old lady living in a £100k house with £18k in the bank/premium bonds or whatever, at what point would someone step in and say you can stop paying? It seems it used to be £23k and a bit now I can only see you have to keep paying the bed and board bit?
K
 

Pickles53

Registered User
Feb 25, 2014
2,474
Radcliffe on Trent
Thanks again nitram, it's as I thought. The more I read about it the less I'm impressed. That's why I'm questioning my understanding. After all the fanfare I expected something clearer and of more obvious benefit to the majority of self-funders.
Trying not to be cynical, but as the article says this has been over-sold or at least over-simplified in the headline press and ministerial announcements. Sadly this is the case with too many government announcements, another recent example is the changes being made to the State Pension for people reaching retirement age from 2016.

The devil really is in the detail.
 

nitram

Registered User
Apr 6, 2011
19,692
North Manchester
"...at what point would someone step in and say you can stop paying? It seems it used to be £23k and a bit now I can only see you have to keep paying the bed and board bit?..."

Resident's payment does not stop at the upper limit, it tapers off to the lower limit.
None of this changes in April 2016.

The hotel cost is not an extra cost, the current fee is split. The interesting bit is going to be how both the home and the LA do the split.
 

Delphie

Registered User
Dec 14, 2011
1,269
Trying not to be cynical, but as the article says this has been over-sold or at least over-simplified in the headline press and ministerial announcements. Sadly this is the case with too many government announcements, another recent example is the changes being made to the State Pension for people reaching retirement age from 2016.

The devil really is in the detail.
It's hard not to be cynical. :(
 

nitram

Registered User
Apr 6, 2011
19,692
North Manchester
"I'm probably being thick but if the difference between income and fees stack a debt up against the home presumably that debt is called in at some point and the home has to be sold anyway - just later. So what's the advantage? Or is that it? A longer deferment"

Depending on the circumstances it can be useful.

If someone with little capital is living in the property and it is sold they would have a housing problem.

If the person in care has substantial life insurance or money invested in a trust that only pays out on death it makes sense to agree deferred payments, the property could be left to the occupant and after the death of the person in care the LA repaid out of the trust funds or life insurance.

For reference starting this April interest does not accrue until repayment but is charged annually, probably at ~4%