A relative’s move into a care home is likely to affect the whole family. As well as being an  extremely emotional time, there are often serious financial concerns including whether the house must be sold to pay for the care. 

The first issue to resolve is who foots the bill.  If a person has significant, complex and ongoing physical or mental needs, he or she may qualify for NHS funded Continuing Care.  If not, a financial assessment is carried out.  A person with assets of less than £20,750,  will receive assistance from the Local  Authority but anyone with assets over £22,000 (including half of any joint assets) will be responsible for paying their own way.  As the average weekly cost of care in Wales is £500, this can have a significant effect on the finances.

Unless a person has sufficient income to cover the costs, their capital must be used.  Typically, the greatest concern is whether the house will need to be sold.  The house will be ignored if, for example, the spouse or partner still resides in the property or if it is still occupied by a relative aged over 60 or who is incapacitated.  The Local Authority may also disregard the house’s value if, for example, it is the sole residence of someone who gave up their own home to care for the owner.

If someone gives their house away, the children,  the Local Authority and the Department for Work and Pensions have the right to examine the timing and motivation of such a gift.  If they can establish that the owner deliberately deprived himself of the house to try and obtain funding, they can treat him as still owning it.

The timing of any gift is crucial.  There is no time limit  (the 7 year rule relates to Inheritance Tax, not to care home fees) but, provided a house is transferred at a time when the owner was fit and healthy and could not have foreseen the need to move to a care home, it would be unreasonable for a Local Authority to argue that the property should be taken into account.

Transferring a property is not something to enter into lightly and it is essential that you take legal advice to ensure that your rights to continue living in the property are safeguarded.  Please speak to our Wills, Trusts and Probate department for advice.