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Avoiding care home fees - Sarah Pennells, SavvyWoman.co.uk

Can you give away your home to avoid paying care home fees?

Few of us like the idea of going into a nursing home and paying the fees is something many people resent. The coalition government is looking at ways to limit the costs to individuals, but any change won’t come in for some time. In the meantime many people are trying to work out how they can help themselves. Giving your home away to your children might seem like an obvious move, but is it legal and, if so, should you do it?

Giving your home away
The rules about how your capital and savings (including your home) may be assessed if you need care are complicated but in basic terms, the value of your home won’t be taken into account if:

• Your husband/wife/civil partner or partner lives there. There are other exceptions as well, such as if you share the home with some aged over 60 or below 16 or someone of any age who is disabled.

• The NHS pays for your care. The NHS will only fund your care if you need ‘continuing health care’ rather than social care. If you need to go into a residential home, you wouldn’t qualify for NHS funding, but if you need to go into a nursing home, you might.

• You have just moved into care. The value of your property should be ignored for the first 12 weeks that you need care in a nursing home, however not all local authorities volunteer this information.

Can I sell my house or give it away?
You might think the easy way around this is to sell your house and give away the proceeds or to give your house to your children, but it’s not that simple. If you need residential care one of the first questions the local authority will ask is whether you own your own home. If you answer ‘no’ it will then want to know whether you ever owned your own home.

The rules aren’t entirely cut and dried, but what the local authority will look at is whether any homeowners sold or gave away their property knowing they needed care (it’s called ‘deliberate deprivation’) or if they did so when they had no idea they might need care.

• As a guideline, if the house or money you’d raised from selling it were given away six months or less before you needed care, the local authority will assume you’ve deliberately deprived yourself of your home and reverse the transfer.

• If the house was sold or given away more than six months before you needed care, the local authority will have to resort to using insolvency laws to investigate whether you gave it away deliberately.

Will the local authority investigate?
Local councils are becoming increasingly vigilant in following up cases where houses have been sold or transferred and there’s no time limit on how far they can go back. Their powers are quite extensive:

• Local authorities can ask for the notes of financial advisers or solicitors who you’ve had meetings with to arrange the sale or transfer of the property.

• If you’ve given money away and it’s been spent, the local authority will simply refuse to contribute towards the funding of a care home until the value of the money that was given away or transferred has been used up paying care fees.

What to think about
It is definitely possible to give away your house or to sell it and give away the proceeds, but you may be no better off depending on the timing and your reasons for doing so. You will also limit your choice of care homes as many won’t be available to local authority funded residents. Lastly, there may be problems you’ve not anticipated if you give your home to your grown up children and they get divorced or go bankrupt.

Sarah Pennells

SavvyWoman is the brainchild of Sarah Pennells, who's a well known personal finance journalist and broadcaster. Sarah has appeared regularly on BBC Saturday Breakfast and writes for several magazines. (photo: Simon Brown)

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