How To Avoid Selling Your House To Pay For Care

How To Avoid Selling Your House To Pay For Care

28 Apr 2023

Though it is distressing, even before we start thinking about it, we may feel anxious when we have to pay for long-term care later. It can be one of the biggest concerns of people leaving dependents without a place to live.

However, in the UK, the local authority will not make the spouse or dependents homeless to pay for the care, and this applies to other qualifying dependents who live with you like civil partners, unmarried partners, close relatives, ex-wives if they are single parents or relatives who are over 60 or incapacitated.  

Since you may have to pay a lot for such care, it is advised to carefully plan to understand the possible future costs and determine how to fulfill them. You can get advice from an expert who provides different options to avoid selling the house to pay for care.   

If you are facing a huge care bill and plan to sell the house, or if the family members encourage you to move into care but are still struggling to pay, you must plan it, considering the extremely high care costs, which continue to rise. 

Residential care is often very expensive because you need to pay for the bed and the board, and if you can get such care at home, you can cut significant costs where you may have to pay weekly or monthly for the services you use. 

Whether you are liable for care costs depends on factors like your current earnings, savings/assets, the care you need, the home assessments carried out by the local authorities or council social care, and the number of dependents in the home. Paying for care can put a lot of strain on your finance.

The government has provisions to provide support to protect the most financially vulnerable, but it tests whether you need to pay for the care you get or not. For example, if you have savings or assets in your account, you may be asked to cover the care costs, while those who are disabled or older, who do not have any savings or assets, may continue to revive the care they need.

How To Avoid Selling Your House To Pay For Care UK?

Perhaps everyone needs care at some point in life, or you may have to provide care to your parent or elderly family members; if your spouse or partner wants to live in the house and not sell, you can avoid having to sell it to pay for care.

You and any qualifying dependent who lives in the home have the right to stay there, and they cannot be forced to sell the house to pay for care.

A qualifying dependent could be someone who lives in your home and is your spouse or a civil partner, an unmarried partner, a close relative over 60, a close relative under 16 for whom you are legally responsible, or an ex-spouse if they are single parents.

So you must plan and need not worry about your near and dear ones becoming homeless when they have to pay for care.

How To Avoid Selling Your House To Pay For Care In Scotland?

Getting old and needing care is something any of us will not want to dwell on as it can be a highly stressful and emotional experience, especially when you do not have access to money for care needs, and you must make plans on time to avoid delays.

If you do not want to sell the home straightaway, the local council can offer you the opportunity to enter into a deferred payment agreement which means the council will pay for your care until your house is sold, and then you can recover the amount you owe. 

In Scotland, the council will conduct a means test to consider the savings, investments, and pension details to estimate the home's value. If the combined wealth exceeds £23,250 (£40,000 in Wales and £27,250 in Scotland), you must pay your care fees for the rest of your life.

Care home fees can range anywhere from around £30K to £50K per year, depending on individual needs and priorities and the level of care required.

Care Home Fees And Property

Care home fees can be over £30k a year. If your financial assets are below a certain threshold, you will qualify for care costs, and the assessment is made through a means test. If you no longer live in the home, the home's value will be assessed in the means test.

So if any family member, a qualifying dependent, or you are no longer living in the home, it will be mentioned in the means test. Still, other assets will be counted if anyone occupies the house. 

Selling Parent's House To Pay For Care UK

As per the current regulations, any assets held by the children are deemed separate from the parent's home and not included in the means testing. Therefore, the only time you have to sell the home is to cover the cost of the care home when you do not have any qualifying dependents living on the property.

If you have saved a decent pension, you can avoid selling, but the fees of a care home are often much higher, and it is beyond the reach of average homeowners, so in that situation, you may have to sell. 

You may have to sell the home to pay for care if you move into a residential care unit and no qualifying dependent still lives in the house. However, even when you move to a care home, if you pay for care from your resources like private pensions and savings, you might not have to sell the house.

It is because most care homes fees are expensive, and most people in such circumstances resort to their homes to pay for the care. Nevertheless, if you want to continue to live in the house, and if the member of the family lives in the family home while you need a care home, in that case, you will have to pay the fees.

Tenants In Common To Avoid Care Home Fees

The asset is jointly shared with the spouse like the bank deposits and joint mortgages, then the wealth is shared as a part of the means test, but the asset owned by the spouse does not count as a part of the means test; hence, you must not be tempted to transfer the assets solely into your spouse name as it may be counted as deliberate deprivation.

Putting The House In Trust To Avoid Care Home Fees

One cannot deliberately avoid paying the care home fees by putting a house in a trust or gifting it to someone. The benefit of placing the house in a trust is that you can avoid probate court save estate taxes, and get protection from creditors. The drawback of such an arrangement is that it can cost you to create trust and manage the paperwork.

Is There A Cap On Care Home Fees UK?

Yes, there is a cap on care home fees as the government introduced an £86,000 cap on the amount anyone in England will need to spend on personal care in October 2025. It includes nursing care, residential care, and support for washing, eating, dressing, medication, and others, but it does not include food, accommodation, and energy bills. 

Do I Have To Sell My Home To Pay For Residential Care?

You may have to sell the home to pay for residential care in case it is the primary source of funds for care, but if you have savings or private pensions to pay for care fees, then you can avoid selling. If those are not an option, you may have to sell the house as long as no other dependents live in the care home.

If the house does not sell quickly, the family must pay for the mortgage, council tax, utility bills, maintenance, and other bills, and the cost of senior living. 

You can avoid selling to pay for care when you have dependents who will continue to live in the house after you move into the care home. Still, you cannot be forced to sell if you have a dependent who has the right to stay there indefinitely as long as they are one of the qualifying people, like your spouse or partner, a relative over 60, or a relative under 16.

There are other ways to avoid selling the home to pay for residential care; like if you can or do not want to sell, you could ask the local council about a deferred payment agreement. It is the agreement where the council pays care home fees and claims the money from the eventual property sale before or after the death. 

Deferred payment is an option if your needs have been assessed and the healthcare workers conclude that you need a care home if your savings / personal assets are under  £23,250 (not including the house value) while you are not currently in a 12-week disregard period.  

Are Next Of Kin Responsible For Care Home Fees?

If someone dies, their care home may issue an invoice for any outstanding care home fees, and the next of kin is not responsible for paying, but it is taken from the estate. So as a next of kin, you are not responsible for care home fees.

How To Protect My Property Against Care Home Fees?

To avoid care home fees, you can transform the agreement to Tenants in Common and create a trust. First, you must enter an arrangement where you and your spouse feel comfortable.

For example, there is a situation when the tenants in common split the property, which is not equal, and one of the owners needs to put more into the purchase. However, it often is a separate document called a deed of trust that outlines the different percentage split.

Can I Transfer Ownership Of My House To Avoid Care Fees?

It depends on the family's financial situation, and you cannot sell the house to avoid care fees unless you have some specific financial situation. If you transfer the home's debts to one of the children or dependent before you need to go to care, the local authority treats it as a case of deliberate deprivation of assets, and it assumes you still own the home. The same applies if you make a large gift to reduce your savings. 

Under some circumstances, you can transfer the home without penalty to some people like your spouse, a disabled child, a child under 21, a caretaker child, or a sibling who has an equity interest in the house and lived in the house preceding your nursing care admission. In addition, you can transfer the house to a trust to offer exclusive benefits to a disabled individual under 65.

Generally, when you transfer the house to your kids before death, they do not get a step up. Instead, their basis is whatever you paid for the house. 

Can You Avoid Selling Your House To Pay For Care?

The council may offer short-term deferred payment agreements, which can act as bridging loans. It is the amount you loan in monthly installments to allow you to pay for care, and then you collect repayment upon the eventual sale of the house. 

Immediate needs annuity or deferred care fee payment plan acts like insurance policies where you pay a lump sum for a regular contribution to care costs.

Also, you can use equity release, which provides a way to access cash from the value of your home without having to sell it. You may decide to rent out the home or use the income to pay for the care home fee, but in that case, the rental income is taxable, and you need to manage taxes and other responsibilities of a landlord. 

How Much Savings Can You Have Before You Have To Pay For Care?

If you have lesser savings or other investments, you can apply to get funding from the local council, and the threshold depends on where you live. In Wales, you get the extra payment if you have less than £24K in assets and receive care at home.

If you have less than £50K in assets, you can get residential care through your payment, which must be sufficient to provide reasonable care. In most cases, the authorities consider transferring properties to the children when the financial asset declines below the threshold as deliberate deprivation of assets. 

The threshold in different parts of the UK is planned under the social care reform for England, including the change to the thresholds. The threshold in England is £14,250 – £23,250, and in Wales, £24,000 (for care at home) and £50,000 (for residential care). The threshold for Scotland is £18,000 – £28,500, and Northern Ireland is £14,250 – £23,250.

Can My Daughter Continue To Live In My House If I Go Into Care?

If a son, daughter, or any other relative lives with you and they are over 60, and your home is their permanent residence, then the property is not included in the means test assets, and they can continue to live there.

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