Do I need to sell my house to pay for long-term care?
When will I need to pay for care?
If your long-term needs are ancillary or incidental to the need for accommodation, you will need to fund the cost of your care if your capital is over the capital threshold of £23,250 (in England). You may be entitled to help such as Attendance Allowance and the NHS may pay a contribution towards the nursing care provided by a registered nurse, where you receive care in a nursing home.
However, when calculating whether you should be responsible for paying your own care fees, the value of your home may be considered.
How will my property be assessed when calculating the cost of care?
Your property will be disregarded if:
- Your placement is temporary
- Your home is occupied by your spouse, a partner, former partner or civil partner (except an estranged or divorced partner, former partner or civil partner unless they are a lone parent)
- A relative or family member (from a specified list) who is: –
- Aged 60 or over
- Under 16 and a child whom you are liable to maintain
- Incapacitated (someone in receipt of incapacity benefits or has needs which would qualify for such benefits)
I don’t have much money in savings, but I do own a house
If you make a move into a care home that is permanent and you have less than £23,250 in savings, the local authority are not allowed to include the value of your property when assessing whether you need to pay for the first 12 weeks – the “12-week disregard”. This time is an opportunity for you to decide how you want your house dealt with; e.g. rented out or sold. During this 12-week period, the local authority will pay your care home fees until your property sells (if before the 12 weeks have elapsed).
During this time, the local authority and the care home will have a contract between them for the care fees to be paid to pay a proportion of the care home fees to them. You may still be required to contribute from your income and savings – but you will be told this after a financial assessment has been completed.
If you are in a care home that charges more than the local authority would usually pay for similar care, you may be asked to pay a top-up fee.
A deferred payment agreement is an arrangement with the local authority that lets you use the value of your home to help pay the costs of your long-term care in a care home. Short-term stays in care homes aren’t covered by the scheme. However, once the local authority decides you are eligible for a deferred payment, the care home fees will be paid by the local authority on your behalf. You can then decide whether to delay repaying the local authority until you decide to sell your home or you may want it paid when you die.
This is, in effect, a mortgage against the property that you agree with the local authority rather than a commercial lender.
If you die, the executor of your will is responsible for repaying the amount owing on whichever is the sooner of the following dates:
- the date on which the property is sold or disposed of
- 90 days after the date of death
The local authority might give the executor longer to repay the amount if there are difficulties or delays in repaying.
Equity release allows you to release money from your property and is usually organised through a commercial lender. There are different types of equity release schemes and you need to ensure that you get the best independent financial advice on whether releasing equity is the right option for you
I own a property with someone else
When two or more people purchase or own a property, they have the choice of owning the property in one of the following ways:
If the property is owned as joint owners, then:
- the property is owned jointly in equal shares irrespective of the contributions made by each owner;
- On the re-sale of the Property, each is entitled to an equal share irrespective of the contributions made by each owner towards the purchase of the Property or otherwise:
- on the death of one of them, the property will automatically belong to the survivor, irrespective of whether the parties have made a will; and
- the survivor can deal with the property in whatever way he or she chooses.
Owners in Common/Tenants in Common
If a property is owned as owners in common, then as owners:
- they own separate shares in the property, which can be equal or in some other proportion such as one quarter and three quarters (or equal to the contributions made by each owner towards the purchase price perhaps);
- on a re-sale of the Property each owner is entitled to his or her separate share.
- on the death of one of them, that deceased’s share does not pass to the surviving owner but passes in accordance with his or her will. If no will was made, it will pass to the deceased’s next of kin;
- the survivor retains his or her own separate share in the property; and
- the survivor is not the owner of the whole property. Of course, the deceased might have willed his or her share to the survivor, but you may want to ensure that a person (who is not your co-owner) inherits so your will will need to reflect that
You may want to consider how you own the property and whether this can be altered (possibly by ‘severing’ the joint tenancy) as the value of your share when assessed for care fees may be reduced because it is difficult to sell a part share in a property on the open market.
Specialist Long-Term Care Solicitors
Our friendly team of care planning solicitors regularly assist individuals and their carers to navigate the systems and processes surrounding long-term care.