When planning for their future, people often do not factor in the possibility of having to pay for care home fees. Given the fact that over 291,000 people over the age of 65 are currently living in care homes in the UK, this is something which should not be forgotten when preparing a will.
How are Care Home Fees paid for?
The current position in the UK is that the local authority may contribute towards the care fees of a person entering a residential care home if they have limited funds.
|Capital assets under £14,250||Local authority covers full cost of care|
|Capital assets between £14,250 and £23,250||Local authority may contribute towards care|
|Capital assets over £23,250||Local authority will not contribute to care fees|
As a result, it is a sad reality that many elderly people must spend a significant proportion of their savings or sell assets, such as their home, to pay for their care as they grow older. This can deplete the inheritance intended for children and relatives. This is a common problem and we are often asked how we might be able to prevent this from happening.
A strategy employed to protect you from this eventuality is to change the way you own your home and how it transfers under your will.
Joint Tenants or Tenants in Common?
Many partners own their property as joint tenants. This means that each partner owns equally the whole property. The effect of this is that when one partner passes away, their share in the property passes automatically to the other. However, it is also possible to hold a property as tenants in common whereby you each own a portion of the home. This does not follow the same rules of joint tenancy; on death of a partner, the property passes under their will instead of automatically to their partner.
How does this affect Care Home Fees?
Therefore, if your will leaves the property to your children whilst specifically allowing your partner to remain in the property, this prevents the home being taken into consideration when the local authority assess your capital assets. The local authority cannot include homes where a husband, wife, partner or civil partner currently lives in a means test calculation. This protects your home from being sold for the purpose of funding care home fees.
Similarly, if your partner then needed to go into a care home, some of the property would fall outside that which could be assessed because they would only be deemed to own half of the property as a tenant in common. This safeguards half of the property from being included in a means test.
With our specialist knowledge of how these provisions work, we can help you find the most effective way of drafting your will to provide for those closest to you and protect your assets.