Frequently Asked Questions About Residential Care Fees
Get the answers to common questions surrounding Residential Care Fees.
Contact Our Team Of Legal Experts Online
Here for you.
We act for clients in Corby, Kettering, across Northamptonshire as well as all over the country in England and Wales. Distance is not a problem!
Call our Corby office on 01536 276300 or our Kettering office on 01536 311690 today or contact us online.
What is a deprivation of assets?
Answer: A deprivation of Assets (in relation to residential care fees) is where you deprive yourself of an asset (such as giving away savings or your property) to prevent that asset, savings or property from being claimed by the Local Authority if you ever went into residential care in the future. Unless you have a very good reason as to why you have given away or transferred away an asset, then the Local Authority are likely to regard that gift or transfer or disposal as a deliberate deprivation and will look for you to still pay for your care on the assumption that you still have that asset in your own name. Some people think that if you give away an asset and a certain period of time passes, then it cannot be regarded as a deliberate deprivation. They sometimes refer to the seven year rule (which actually relates to inheritance tax) or a six year rule (which relates usually to time limit for issuing proceedings in certain types of cases). However, there is no time limit and in theory a local authority could regard a gift transfer disposal of an asset ten years, twenty years or even longer ago.
Transferring Property into a Trust
Question: Can I transfer a property into a Trust to avoid care fees?
Answer: It is possible to transfer a property into a Trust and not have to pay care fees if you subsequently have to go into residential care. However, it is crucially important that you have a genuine reason or a number of reasons as to why you are transferring the property into the Trust into the first place. Please refer to the section on this webpage relating to Property Trusts. It is crucially important that you seek legal advice about this and that you go to a solicitor who knows what they are doing.
Gifting Property
Question: Can I gift a property to avoid care fees?
Answer: In short – no. Any form of gift of an asset or property is likely to be regarded by the local authority as being a deliberate deprivation of an asset. If you are looking at disposing of a property, then you really should be looking to transfer it into a Property Trust. Please see our section on Property Trusts. It is important that you seek legal advice from a specialist solicitor in connection with this if you are thinking of doing something like this.
Gifting Property to Children
Question – Can I gift my property to my children whilst I am alive?
Answer: Yes, you can gift your property to your children whilst you are alive. However, any gift to your children is likely to be regarded by the local authority as a deliberate deprivation if you ever went into residential care in the future and they will therefore look for you to pay for your own care fees on the assumption that you still owned the property. In addition, when gifting property to your children (or indeed to anybody else) you need to bear in mind certain important points such as the following:-
- It is No Longer Your Property– You will no longer own the property so you will no longer have control over what happens to it and you will not be entitled to any of the sale proceeds when the property is sold.
- Bankruptcy – If your children go bankrupt, then you could lose your home and the property.
- Death – If any of your children die, then their spouse or family may well look to claim the property and you could again lose your home.
- Divorce – If any of your children get divorced, then again their spouse could look to claim the property and you could lose your home.
- Falling Out – If your children fall out with you, then you could again end up losing your property.
What does putting a house into Trust mean?
Question: What does putting a house into Trust mean?
Answer: Putting a house into trust can mean many different things. However, what it usually means is setting up an arrangement whereby the house is transferred into the names of say your children and they hold the property on trust subject to you having the right to reside in the property for the rest of your life, rent free. You would have to pay the outgoings such as the utility bills and insurance as normal but your children would not be entitled to make any claim against the property until you have died, at which point the Trust would normally be brought to an end and the children could then sell the property. However, property trust are quite complicated arrangements and it is essential that you seek specialist legal advice from a firm of solicitors such as ourselves.
Property Protection Trusts
Question: What is a Property Protection Trust?
Answer: A Property Protection Trust is a generic term that refers to a legal arrangement whereby a person’s home is placed into a Trust in the hope and expectation that the property will be protected and not claimed by the local authority in the event of you ever going into residential care. Again, we strongly recommend you seek specialist legal advice.
Gifts to Avoid Care Home Fees
Question – Can I make gifts to avoid care home fees?
Answer: If you make a gift with the deliberate intention of that gift being treated to avoid care home fees, then the gift will probably be treated as a deliberate deprivation of asset and will be taken into account by the local authority if you ever went into residential care in the future. If however you make a gift for another reason, such as because of part of an inheritance tax planning strategy or because you wanted to set up a Trust for your children, or because you wanted to transfer your property into a property trust, then often those gifts could have the effect of avoiding care home fees.
How to Avoid Selling Your House to Pay for Care
Question: How do I avoid selling my house to pay for care?
Answer: If you transfer your house into a Property Trust and in particular, an “interest in possession trust” and that you set that trust up for reasons that are unrelated to going into care, then that might result in you not having to sell your house in the event of you ever having to go into care. However, this is a very specialist area and it is crucial that you seek legal advice.
Is Deprivation of Assets a Criminal Offence?
Question: Is deprivation of Assets a Criminal Offence?
Answer: In theory, it might be but we are not aware of the Police or Crown Prosecution Service taking any active interest in this area. The way to avoid any criminal involvement is to make sure that any deprivation of assets complies with the law and to do that, you need to seek advice from a specialist solicitor in this area.
Property Trust Will
Question: What is a Property Trust Will?
Answer: A Property Trust Will is usually an arrangement whereby if a couple own their property in both their names, then they can set up a special Will (sometimes called a Will Trust) whereby it states that whoever dies first, that their half share doesn’t pass to the survivor but instead passes, say, to their children, subject to the survivor having the right to live in the property. That means that if the survivor then subsequently went into residential care, that the deceased’s half share of the property would not be claimed by the local authority. Making Will Trusts are excellent ways of protecting half of the property in the event of one person dying and the survivor subsequently going into residential care. We always recommend that these types of Wills are made if you are worried about residential care fee risks. Please call us for advice.
Putting a House in Trust
A Property Protection Trust is a generic term that refers to a legal arrangement whereby a person’s home is placed into a Trust in the hope and expectation that the property will be protected and not claimed by the local authority in the event of you ever going into residential care. Again, we strongly recommend you seek specialist legal advice.
Please Contact Us
Specialist legal advice is essential if you are planning on taking any action, because each situation is different and what works for one individual may not be the right solution for another. We provide professional, friendly help and advice – and we want to see you get the help you need without compromising on your personal wishes and without taking away what you hoped to pass on to your family. Please feel free to contact us on 01536 276300 or 01536 311690 to discuss further what your options are and how we can help you. Please quote “website” for a 10% discount off our normal legal costs.
There is no need for us to meet up face to face. You can communicate with us over the phone or video conference call (Zoom/Whatsapp/Facetime/Skype) and by post and email. Wherever you live in the UK, we can help. Distance is not a problem.
Disclaimer – Important Warning – Please Read Carefully
Taking action to avoid paying care fees is difficult. Some people are keen to take actions that help reduce paying residential care fees, using any legal means available. They take the view that if it’s legal then it’s fair game, and that if there are loopholes that exist, and the government or local authority don’t close them, then they can be exploited. However, there is a difference between the legal right to try to reduce paying residential care fees, within the law, and falling foul of the deliberate disposal or deprivation rules and the likely negative outcome of such efforts. We offer no views on this, other than saying that we can only advise and help on using the legal and legitimate ways of doing this and that if we are uncomfortable with a potential action, then we will tell you if it’s not a good idea.
Deliberate Disposal/Deprivation of Assets
Taking actions with the deliberate sole intention of avoiding paying residential care fees rarely works. For example, gifting assets or your home away or incurring substantial expenditure of capital will be treated by the Local Authority as a deliberate disposal or deprivation and will be successfully challenged and reclaimed. There are legally right and wrong ways of gifting assets.
Disposal/Deprivation Unrelated to Residential Care Fees
However, if you dispose of an asset for a genuine reason that is not related to avoiding paying residential care fees then there is a chance that it might not be challenged. Therefore, by taking actions for other reasons that are unrelated to residential care fee protection that can work. One good example of this is making “Will Trusts”. This is where a couple make Wills that state that when one person dies, their half share of the property passes into a trust. The survivor would have the right to continue to reside in the property, but the deceased’s half share would be protected and would not be claimed by the local authority if the survivor went into residential care. There are various other options.
Risks of Challenge
It may be legal to take certain actions to protect certain assets from being claimed to pay for residential care fees, but that doesn’t mean that those actions will be effective. The effectiveness of these actions will not be known with certainty for potentially years and possibly much longer. Anyone who believes that there are guaranteed ways of reducing the payment of residential care fees either don’t understand our legal system or is deliberately trying to deceive you. We can rarely say for certain that any actions you might want to take will prove successful, without it being tested by a court.
We inform you of the risks, the consequences, the costs and the downsides. Ultimately though, it is important to form your own understanding of the risks and downsides.
Moral Arguments
We are all aware of the different beliefs, arguments and standards that apply when anyone references morals in the context of reducing the payment of residential care fees. Some people believe that the current approach to care fees in the UK is arguably unfair, particularly to those who have worked hard through their lives and paid their taxes and mortgages and scrimped and saved to build up a nest egg and generally done the right thing are being penalised, while those who haven’t fully paid their way and generally wasted away their assets end up getting residential care for free. There is an argument that this is simply not fair. There are similar arguments in relation to tax avoidance. For example, it’s wrong for big companies and for rich people, but fine for everyone else to find legal ways to pay less tax. Whatever the arguments or your views are, all we can do is to try and provide you with unbiased information so that you can make the decision that is right for you.
General Information
The information, materials and opinions contained on this website are for general information purposes only, are not intended to constitute specific legal or other professional advice, and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances. Seatons Solicitors does not accept any responsibility for any loss which may arise from reliance on information or materials published on this website.
Accuracy
All the information and documentation on this site deal only with matters of law in England and Wales. Every reasonable effort is made to ensure that the information on this site is accurate and up to date. However, we assume no responsibility or duty to update such information and we cannot guarantee that it will be fault free. Versions as the documents and information can easily become out of date. We reserve the right to amend add or alter any part of this site without giving prior notice. You are advised and responsible for reading all of the information on this site. We will do our best to correct errors and omissions as quickly as possible after being notified of them. This disclaimer section applies only to the extent permitted by law.
Liability
We cannot and do not accept any liability for any losses or claims arising from any inability to access the site or from any interruption or failure to complete a transaction. We cannot and do not accept any liability for any indirect or consequential loss of any kind in contract, tort, or otherwise arising out of use of the website or for any products or services purchased from the site. We will only be liable for direct loss (save in the case of death or personal injury in respect of which there is no limit) up to a maximum total of any service purchased from this site in respect of any claim.
Please call us on 01536 276300 or 01536 311690 for help. Please quote “website” for a 10% discount on our normal legal costs.
There is no need for us to meet up face to face.
You can communicate with us over the phone or video conference call (Zoom/Whatsapp/Facetime/Skype) and by post and email.
Wherever you live in the UK, we can help. Distance is not a problem.