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Care Fees and Lifetime Gifts

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Category: News
02 August 2019
Care Fees

When the decision is made to move into residential care, you may be expected to contribute towards the cost, both from your income such as your state pension and from your capital.  Before you can receive any financial assistance from your relevant Local Authority, that Local Authority will need to carry out a care needs assessment and establish whether you qualify for the non-means-tested free personal and nursing care payment.  They will also carry out a means tested financial assessment to work out how much financial help you qualify for and how much you should pay towards your Care Home fees.

If your capital savings are between £17,500 and £28,000 you will be expected to make some contribution from your capital towards your Care Home fees and receive some support from the Local Authority.  If your capital is greater than £28,000 you will be declared self-funded and will only receive the non means-tested free personal and nursing care (providing the care needs assessment concludes that you qualify for it). 
Some of your capital may be disregarded or ignored. This can include the principal dwellinghouse that you share with your spouse or partner.  If you jointly hold capital with another party the Council will usually expect that capital to be divided equally between the joint owners.  The Council may also take account of what they refer to as “notional capital” and this might include capital that you could have access to if you asked for it e.g. money held in trust or capital assets which you have deliberately disposed of to avoid using them to pay for Care Home fees.

Lifetime Gifts

Many people consider passing on their savings or other capital assets to their children and other persons during their lifetime.  However, giving away such capital assets does not guarantee that you will secure financial assistance with Care Home fees at a later date.  The Local Authority may seek to challenge any gift or transfer which they consider to be a deliberate deprivation of capital.  The Local Authority must demonstrate that the most significant reason for the gift or transfer is to deprive yourself of that asset and avoid using that asset to pay Care Home fees.  The timing of the gift and the reasons behind the gift will be important in establishing if the gift could be successfully challenged.  Court cases have taken different interpretations as to what evidence a Local Authority needs to demonstrate deliberate deprivation and you should seek detailed advice from your solicitor if you are considering making a lifetime gift over whether such a gift could be seen as a deliberate deprivation.  If you are found to have deliberately deprived yourself of a capital asset it may be treated as notional capital by the Local Authority and as such prevent you from receiving financial assistance towards your Care Home fees.

When the gift under consideration may be your principal dwellinghouse there are a number of other issues that you should consider including what right you would have to continue to reside in the property for the rest of your life, whether there are Inheritance Tax or Capital Gains implications, whether entitlement to other social security benefits could be affected and what would happen if the recipient of the gift either died, divorced or had financial difficulties during the remainder of your life.  It would also be sensible to agree who would be responsible for the maintenance, repair and upkeep of the property after the gift is made. 

The issue of Care Home fees and lifetime gifts is a complex matter and you should take detailed advice from your solicitor before any decision is made.

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Paris Steele has been providing a comprehensive legal service to the residents of East Lothian since 1926. We have offices in North Berwick and Dunbar and are proud to combine the highest quality of professional advice with first rate customer service. We understand the importance of getting to know you and our legal services will be individually tailored to meet your needs and resources. We are happy to act for both individuals and businesses. Our services are available to everyone and whilst our area of practice is limited to within Scotland we have clients from the whole of the UK and overseas.

We understand the importance of getting to know you and our legal services will be individually tailored to meet your needs and resources. We are happy to act for both individuals and businesses.