Planning Ahead: The Cost of Care

Aileen Hirst, STEP qualified solicitor in the Wills and Estates team, discusses the cost of care.

Care costs money and, as more of us live longer and face a future in which some form of care is likely to be needed, the cost of care and who pays for it can be a worry for many. It is a subject most people want to know more about.

Your local authority may be responsible for arranging your care, which may be care in your own home or residential care, but this does depend entirely on your personal circumstances; whether you are able to arrange your own care and what financial resources you have to self-fund your care. Care and support that is arranged or provided by a local authority in England is governed by the Care Act 2014. The local authority will carry out two independent assessments.

Needs Assessment

A needs assessment will be carried out whenever a person appears to need any level of care or support. This assessment will consider whether the person has eligible needs, taking into account any physical or mental impairment or whether they are suffering from an illness or disability. Everyone is entitled to a written copy of their needs assessment.

Financial Assessment

The financial assessment is a separate assessment which often runs in parallel with the needs assessment but it cannot influence the assessment of care required.

The financial assessment is a detailed questionnaire to gather both current and historical information about your finances, both income and capital.  The capital thresholds for paying for care are often quoted in the media. The upper limit, above which a person is responsible for paying for all their own care costs, is £23,250. The lower limit, below which the local authority will fund the care costs, is £14,250,. Between these thresholds a contribution towards care costs will be required.

Some assets are disregarded when calculating a person’s capital. However, there is a popular misconception that if a person does not have financial assets at the time of the assessment, then the local authority will fund their care costs. This is not the case.

Deprivation of Assets

Many people want to pass on their accumulated wealth to the next generation and are worried that their life savings will be eaten up by care costs in their later years.  We often receive calls from individuals who want to transfer assets such as their home, savings or even valuable possessions, to family members, to avoid paying care costs.

There are often stories in the media about the social care crisis in England; local authorities are having their budgets cut and with more people now requiring care this puts additional strain on those budgets. Local authorities are necessarily therefore paying closer attention to lifetime gifts where a subsequent application for assistance with care is made. For example, they may look back through council tax records to see if you have previously owned a property and they will also check Department of Work and Pensions records to see if Attendance Allowance has been claimed as this would indicate you had care needs that may require local authority care in the future.

If you deliberately deprive yourself of assets for the purpose of decreasing the amount that you may be liable to pay towards the cost of care then the local authority, when carrying out their financial assessment, can treat you as possessing that capital or income and will proceed on the assumption that you have sufficient funds to meet your own care needs. This can prove disastrous for you if you no longer have access to those assets.

Lifetime Gifts

This does not mean that you cannot gift assets during your lifetime. However, the purpose and the timing of any disposals must be carefully considered. Any disposal at a time when you can foresee the need for care, which you will need to pay for, in your future, will be up for inspection by the local authority.

It is also important to understand the consequences of gifting assets as it can leave you vulnerable at the very time you most need certainty. When you deprive yourself of assets, you potentially deprive yourself of choice when it comes to deciding what care you will receive.

What Care?

Determining what care a person needs and whether they must pay for it themselves is a complex process and the local authority will work with the individual and their family to help them put in place appropriate care. Not everyone will require care during their lifetime or their care may be funded by the NHS rather than the local authority. If a person is assessed as having to pay for their own care then there are various options available to pay for such care and having your own assets gives you the choice to ensure you receive the care you would like, where you would like, whether in your own home or in a care home.