This piece first appeared in Saga Magazine in March 2000
The text here may not be identical to the published text

Some Home Truths


Don't sell your property to pay for care

Of all the things which causes distress as we get older the thought of having to sell our home to pay for care is one of the worst. As we reported last month the Government has decided that nothing will be done until after the General Election to change the complicated and unfair rules about how people pay for that care. So it is more important than ever to try to hang on to your home if you do have to go into care.

The first thing to remember is that no-one can MAKE you sell your home to pay for care. Of course, care has to be paid for. And if your home is left empty or a younger relative lives in it then you may get no help with the fees. But you do not HAVE to sell your home to pay for them. There are other solutions.

The means-test

If you find that your health or disability means that you have to go into a residential care or nursing home then the local authority will assess you to see if you qualify for help with the fees. Now the cost of care is high – the minimum is around £220 a week for residential care and £320 a week for nursing care – add £50 at least in London and another £50 a week if you want more than the basic minimum standards such as a room of your own. In order to assess your entitlement to help with the fees, the local council will need to know about your income and your savings.

Your income will be assessed and – if you are given help – you will be allowed to keep just £15.45 a week from it – the rest will go towards the fees. But worse than the income test is the assessment of your capital – which includes any savings, shares, investments, or assets that you own. If the total is more than £16,000 you will get no help at all with the fees. In some circumstances the value of your home can be counted as a capital asset. But the rules say it should NOT be counted in some circumstances.

Who lives there?

The value of your home will be completely ignored

· If your husband or wife (or a partner you lived with) still lives there,

OR

· If another relative – even one as distant as a cousin or an aunt – lives there and they are

EITHER

o Disabled – which normally means they get a disability benefit,

OR

o Aged 60 or more

 

And the council CAN ignore the value of your home if – for example – a long-term friend or someone who has cared for you still lives there. So your home is safe and will not count as capital AT ALL if anyone who fits any of these descriptions lives in it. Of course, it would not be right to move someone in just to try to avoid the means-test. But it is worth considering whether any of those exemptions could apply to you.

Who owns it?

Some older people are joint owners of the home they live in. Many people have bought property jointly with one of their children or another relative. Some have given part of their home away to a relative or friend in exchange for help with repairs or maintenance. If there is another owner, that can be very useful. When working out your assets the local council will consider only your share of the property – half if two people own it, a quarter if there are four owners and so on. It has to assess how much your share is worth on the open market. In other words, what would a local estate agent ask for a share of a house or flat? Often the answer is ‘very little’, perhaps even nothing at all – particularly if the other joint owner still lives there. And the value will always be reduced if the joint owner refuses to sell – a point worth remembering when you talk to them next.

So if you are a joint owner, remember to challenge the valuation of your share of the property and encourage any joint owners to refuse to sell their share.

Giving it away

Many people think that the answer to these worries is to give your home away. If you do not own it, they think, no-one can touch it. Sadly that is not true – or not completely true anyway. There are two things to consider.

 

· Why did you give it away?

· When did you give it away?

 

Why? If you give it away in order to avoid the means-test then you will always run some risk that the deal will not work. Even if it was not your MAIN reason, if increasing your help from the state was even part of the reason, then you could be in difficulty. But if you gave it away for some other reason entirely, then its value should not be counted. For example, you may have given it to a relative in exchange for their agreeing to maintain it for you or pay for a new roof. Perhaps it was a wedding gift to a favourite grandchild.

When?

If the council decides you have given your home away to get more help with the fees, then it faces the problem of recovering the money from you – or the person you gave it to. In this case, the longer the gap between giving it away and going into a care home the better. If it is less than six months before, then the local council has the right to make the person you gave it to help pay for your fees. If it is longer than six months, then there are other ways it might try to recover the money including making you bankrupt. If it goes down that route, then it has wide powers under insolvency laws to recover money from other people who have benefited from you giving property away. Even if it is some years before you go into a home, the council may decide it is worth pursuing it through the courts. And even if it fails to recover money, then it may still present you with a bill for the fees. So if you want to try this route, be prepared for a battle and there are no guarantees.

Renting it out

If you do not want the hassle of giving your home away, getting someone to live in it, or battling things out with the local council you still do NOT have to sell it to pay for your fees. If the local council counts the house as capital you will be legally obliged to pay the fees yourself. But if you do not, then the council still has a legal duty to make sure you have the care you need. So it will keep you in the home, pay the fees and simply run up a bill for you. To make sure it gets its money eventually, the council will take what is called a legal charge on your home – so whenever your home is sold or your estate is settled, it will be near the front of the queue for repayment.

But consider this. You could keep your house, let it out, and save up the rent in a building society account. While you live, the council is not normally allowed to charge interest on the money you owe (though some councils are trying to do so, but if yours does, seek advice). Meanwhile, the rent will be sitting in your savings account earning interest. By the time your relatives have to sort out your bills, the rent money and interest could even be enough to pay the bill for the fees. That way your heirs will keep all – or most – of the value of the home.


FURTHER HELP

Age Concern has excellent Factsheets on all aspects of paying for care and giving away property. You can get copies free from Age Concern on 0800 009966 or from its website www.ace.org.uk The rules may be different in Scotland, Wales and Northern Ireland.

 


Good News

The Government has announced two small concessions on disability benefits. One is for people who go into hospital. The other is for those in local council care homes but who pay their own way. The new rules will begin in April.

 

Hospital

Disabled people who have to go into hospital lose one of their most important benefits on the day they go in and cannot get it back until the day after they come out. The benefits concerned are disability living allowance (or attendance allowance if they are over 65). They can be worth up to £52.95 a week. It has always seemed unfair on both them and their carers that the day they go into hospital and the day they come home – they get no benefit even though they need care. From April that will change – benefit will be paid for those days. That will mean an extra £15 for the people concerned. A small step, but a useful one. 50,000 people a year will benefit at a cost of £1.5 million.

 

Care homes

Many disabled people get either attendance allowance or disability living allowance to help with the costs of care at home. But when they find they can no longer cope and have to go into a residential care or nursing home then in most cases the allowance stops. Only one group of people can continue to get it – those in private care homes who also pay all their own fees. People in local council care homes cannot get the allowance EVEN IF THEY PAY ALL THE FEES THEMSELVES. From April this year, the Government has decided that people who do pay all their own fees in a local authority home will also be able to keep the allowance. But anyone who gets any of the fees paid – even £1 a week – will continue to lose the whole lot. The change will cost £4 million and help around 2000 people a year.

 

March 2000


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