Exempt Assets for Residential Care Fees
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Certain types of assets are fully exempt from a residential care fees assessment.
Capital That Is Disregarded Indefinitely
Certain types of capital and assets can potentially be disregarded indefinitely by the Local Authority in my residential care fees assessment. These include:
- Personal possessions;
- Surrendering value of a life insurance policy;
- Capital value of an annuity;
- Capital value of an occupational pension;
- Value of a Reversionary Trust (Trust Fund not land);
- Value of a Life Interest (Trust Fund and land).
Personal possessions such as jewellery, paintings, antiques, cars and other personal possessions are exempt from assessment, unless the Local Authority believes they were purchased with the intention of deliberately reducing your capital.
Capital That Is Disregarded For a Specific Period
In some situations, capital may be disregarded for a specified time. For example, during the first 12 weeks of a permanent stay in a care home. If you are self-employed worker, business assets will be disregarded for stays of 26 weeks or longer.
Assessing Separate Bank Accounts
When considering income and capital, the Local Authority should only be looking at your own assets not of anybody else. Only your share of any joint accounts will form part of your assessment. Joint accounts will pass by survivorship on death of a joint owner, and severance of a joint tenancy is not classed as a deliberate deprivation. Prior to any Local Authority assessment, joint accounts should be closed and separate new ones opened, and it is advisable to split financial resources and open separate bank and building society accounts as soon as possible.
If you convert your savings or other assets into “exempt assets” with a view to avoiding paying residential care fees then this will be treated by the local authority as a deliberate disposal or deprivation and will be successfully challenged and the assets reclaimed.
Summary Of Exempt Assets For Personal Possessions
Check if you own any exempt assets – If you hold any assets that are exempt make sure they are not taken into account when the Local Authority carry out an assessment.
Business Assets – Residential Care Fees Protection
If you own a business and can still take some small part in running that business then your business assets can be disregarded in any care fees assessment.
Self-employed Business Assets
As a general rule, the business assets are included in any Local Authority residential care assessment. If you are resident in a care home and you can continue to provide key important business information and advice from the care home, even for a couple of hours each week, then those business assets can be for that period of time exempt. Business assets will be disregarded for a reasonable period to allow them to be sold and disposed of.
Joint Business Assets (excluding land)
If any business assets (except land) are owned jointly with another person, then that person will be treated as owning their share equally and will be deemed to own one half of the business assets.
Joint Business Assets of Land and Buildings
If any business assets of land or buildings are owned jointly with another person then the value of the residents share in the land or buildings will be deemed as one half of the land or property, less 10% joint ownership discount.
Summary Of Exempt Assets For Businesses
If you are able to spend even a small amount of time helping to run the business (e.g. a couple of hours a week providing key advice from your care home) then you may be able to claim that those business assets can be exempt.
Allow for a reasonable period of time to sell the business assets – The business assets will be disregarded for a reasonable period of time to allow them to be sold and disposed of.
Make sure that all properties and land owned jointly with another person are taken into account.