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Frost Wealth Management Ltd
Senior Partner Practice of St. James's Place Wealth Management
No. So long as your mother continues to live in it, the property won't be included in the means test for care funding. However, half of their joint savings will be. With £15,000 in assets, your father is above the lower capital limit of £14,250 and will be expected to make a contribution of £3 per week.
Applicable in the UK with the exception of Scotland.
Local authority should disregard the property from the cost of care for the first 12 weeks. If the property is still not sold after this time, the authorities can still continue to pay costs but will look to recoup these against the proceeds from the property when it is finally sold. Make sure your father claims attendance allowance to help with the cost of care. Some immediate care fee plans can allow borrowing against the property.
Putting property into trust for future generations should be approached with extreme caution, under the means test your local authority are likely to ask you about your property ownership over some years. If it deems the property was placed in trust deliberately to take it out of the means test it is likely to still be included. Plus with a means test upper threshold being as low as £23,250 (2018/2019) other assets could disqualify you from support in any case.
Trusts are not regulated by the Financial Conduct Authority.
You can ask that your mother is reassessed by the NHS. If she is in need of 24 hour nursing, the NHS should pay for all of this as continuing care. If this was the situation for some time then some of your fees may be refunded.
If you argue successfully that the home is the only one available locally that meets your assessed needs the local authority should meet the full cost assuming that you fall below the £14,250 means test lower threshold. If the local authority still refuses but you have set your heart on this home your family will have to meet the shortfall.
The property will be disregarded from the care funding means test when the first of you goes into care. If the second needs care the value of the property can then be included. If the property then needs to be sold to help with the cost of fees the local authority may help with the funding until the property is sold. Should you both need to go into care at the same time half the property's value will be allocated to each of you for the purposes of the means test.
Their assets put them well above the threshold of £23,250 per person, at which help is given for funding care. However, if they need help with basic daily tasks such as bathing and dressing they can claim for attendance allowance. If they require nursing they will receive NHS nursing care contributions. It is important to discuss with care homes how the contribution is counted for in their fees.
Some care plans will automatically return some capital if the person dies in the first six months. After that you can insure for the return of some capital on death by buying capital protection.
If the capital is simply held in his bank account then it will be included in his estate for inheritance tax purposes on death. If the capital is used to purchase an annuity to fund care then it will effectively be out of his estate on death except to the extent of any capital protection that is brought in, which results in funds being returned to his estate.
If the investments are in your own name they will continue to be taxed at your rate of income tax. It may be possible to set up a trust, naming your father as the beneficiary of income but this may mean not only losing rights to the assets but ultimately could increase his liability to inheritance tax depending on the value of his own estate.
Trusts are not regulated by the Financial Conduct Authority
No - you will be told the annual income it is guaranteed to pay out, so you can match this against a care homes fees. Should fees rise in the future there may be a short fall. However, care homes may be open to negotiation, knowing they are assured of the annuity income. Care plans can offer inflation proofing or annual increases to help address rising fees so a fee limitation or capping agreement is often possible.
Yes - income can be used at any stage to fund either residential or home based care. Note that if income is paid direct to a registered care provider it is tax free. It is essential therefore that the care provider is registered or there will be a liability on the interest element of the income payment.
The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax reliefs depends on individual circumstances.
Yes - the local authority has a duty to assess her care needs irrespective of her wealth and ensure that she has access to suitable care even if she funds it herself.
