Many people are concerned about having to sell their home and use their assets to pay for care, part...
Many people are concerned about having to sell their home and use their assets to pay for care, particularly when they have spent many years paying a mortgage and national insurance contributions.
It is not surprising, therefore, that many solicitors refer to a regular stream of clients calling to say: "I want to give my home away" or the children saying: "Mum and dad want to pass their property over to me".
The question "Can I give my property away?" may be answered simply as "Yes", but the question should be, will it work for the purpose of avoiding the need to pay for care. There you enter, at best, a particularly grey area. It is important to understand that if an outright gift of the home is made it is not possible to ask for it back later, and that the property could end up in totally unexpected hands if, for example, the person who receives the property dies, is divorced, is made bankrupt or simply decides to sell the property for financial gain.
Making a gift of property does not necessarily mean that the property will be excluded from the means test if residential or nursing care is needed. Under the Health & Social Services and Social Security Adjudicator Act 1983, if a gift is made in the six months prior to going into care with the intention of avoiding paying for care, recovery can be made directly from the person who received the gift. But what if a gift is made in advance of six months before the date of going into care? Would it work?
In practice, there is no time limit on how far back the Local Authority can go if they believe you have deliberately deprived yourself of assets to avoid paying for care. What is important is your motive for making a gift, the timing of the gift and your health at that time. If the gift is by way of avoiding paying for care fees or attempting to reduce the amount otherwise payable, the Local Authority is entitled to treat the person requiring care as still possessing the capital and take steps to recoup the care costs.
If the Local Authority does accept responsibility for care fees, it will apply its normal payment limits which may not pay for the type of care that the individual would choose. Many people, given the choice, would prefer to stay in their own home to receive care if at all possible, but figures from the British Nursing Association show that the cost of two hours' nursing care in the morning to help someone to get up and two hours' care in the evening to help prepare them for bed, would cost an average of about £9.50 per hour. This care is called a 'rise and retire care package' and is likely to cost about £260 per week.
While the amount paid for care in a residential home will vary depending on which Local Authority is being dealt with, the published Income Support suggested rate outside London is £218 per week which, if used as a benchmark by a Local Authority, is significantly less than the cost of the rise and retire care package at home. This could mean that the Local Authority will limit the amount that they will pay for care to the cost of a residential home as they have a duty of care to the taxpayer as well as to the person requiring care.
For those requiring care in a home, being able to choose which one they go to will be extremely important as there can be a big difference between a nursing home charging £600 per week and a home that accepts that most of its residents will be funded by the Local Authority at a rate of about £325 per week.
So by gifting assets, a person may inadvertently be giving away their choice to receive care in their own home, or to be able to choose a home that they will feel comfortable in. It is perhaps for these reasons that in the Law Society guidance notes, there is a paragraph that says when it is clear to the solicitor what the objective of making the proposed gift is, they should consider what means other than a gift may exist for achieving the desired objective.
