The erosion of assets as a result of long-term care costs is becoming a concern for many. We are living longer and consequently professional care may become a necessity for many of us.

Care Legislation

The NHS and Community Care Act 1990 obliges Local Authorities to carry out an assessment of anyone who appears to have a care need and to ensure the individual has access to suitable care.

Once an individual’s care needs have been established, the Local Authority will carry out a Means Test to determine the reasonable cost of care required and assess the individual’s ability to pay for or contribute towards the cost, taking into account both income and assets.

Those with assets over £23,250 are unlikely to receive any funding for care, but may be entitled to other benefits to help contribute towards the costs such as Attendance Allowance.

The Government is looking at state protection for people concerned by asset erosion with the proposed introduction of a cap on the amount individuals will be expected to pay for care during their lives. The level of the cap is expected to be in the region of £70,000, which remains a significant sum in relation to the value of many people’s estates.

In situations where the person requiring care is leaving a vacant property, the value of the house will be included in their financial assessment but the individual or their attorneys will be free to decide how to raise the necessary funds to pay for the care. The Local Authority will not simply ‘take the house’ and it may be worth exploring other options which provide the required money whilst preserving the capital asset.

While a dependent relative is living in the house, the value of the house will be disregarded by the Local Authority when carrying out a Means Test.

Deprivation of assets

Making a gift of a home to children or making lump-sum payments in order to qualify for state support is known as a deprivation of assets.  If it is apparent that someone has deliberately deprived themselves of a property or assets in order to qualify for state support, and there is no other compelling reason for the gift, the local authority will carry out the assessment as though the assets still belonged to the individual. There are no time limits on how far back the Local Authority will look.

A properly drafted Will

That said, peace of mind can still come from having a professionally drafted Will. If, for example, joint owners of a property pass their respective shares to their children, subject to the survivor’s  right to occupy, only the survivor’s half of the property will be included in any future means test.