SWT Wealth Management
Advertising feature: Finding the money to pay for care home fees can be one of the biggest financial worries facing us in later life.
Your local authority may help fund your social care – but they can claw back money if they believe you’ve given assets away deliberately to avoid paying the cost of care fees. Arranging social care in later life can burn through money. The cost of residential care now stands at just over £46,000 per year.
Is there a way to avoid paying care home fees?
Many people are under the impression that, if you can reduce the amount of your assets by giving away money, property or income, the state will step in and pick up more of the bill. Gifting money to reduce your overall estate is a common part of legacy planning – and in theory it could help you qualify for state-funded care in later life.
But be aware! There are very strict guidelines on giving away property and assets. A financial adviser can help you understand what these are and help make sure that you don’t fall foul of the ‘Deprivation of Assets’ rule.
So, what is the ‘Deprivation of Assets’ rule?
The Deprivation of Assets rule says that if you reduce your assets so these won’t be included in your needs assessment, you may be intentionally trying to avoid self-funding your social care. The key word is ‘intentionally’. If your local council decides you have deliberately reduced your assets to avoid paying care home fees, they may calculate your fees as if you still owned the assets. It will be as if you had never given them away. This can be emotionally distressing for individuals and their families. Moving into a care home can be very unsettling and the last thing you want is to be worried about money, or whether that money will last as long as you need it to.
If you were fit and healthy, and could not have anticipated needing care and support, then giving away your money may not count as deprivation of assets. However, your local authority will look at the timing of your gifts, to see if you could reasonably have expected to need care and support and it will want to know why you were making the gift.
Your financial adviser can help you make it clear that you made the gift in good faith, to help family with school fees, house purchases or medical care for example – not to avoid care home fees.
However, if your local council thinks you have deliberately reduced your assets to avoid care fees, it can affect the funding you receive. Not only could you end up having to pay for your care in full, but you might also no longer have sufficient assets to fund those costs.
When your council is deciding whether getting rid of property and money has been a deliberate deprivation of assets, they will consider three things:
• Did you know at the time you got rid of your assets that you needed or may need care and support?
• Why were you giving the money or assets away?
• Did you give assets away to deliberately avoid paying for care?
The value of financial advice:
Arranging social care, whether for yourself or your parents, can be confusing and stressful. In particular, the ‘Deprivation of Assets’ regulations can make you feel like you’re treading on eggshells. Early advice from a financial adviser is crucial before transferring ownership of assets to someone else. Just to help make sure your best intentions don’t backfire.
The Deprivation of Assets rule should never make you feel as though you can’t gift money and assets to those you love, even if you’re actually in care. If you discuss and record gifts and assets with your adviser, it’s easier to show that the gift was always part of your personal, long-term financial planning.
SWT Wealth Management is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the Group’s wealth management products and services, more details of which are set out on the Group’s website www.sjp.co.uk/products. The ‘St. James’s Place Partnership’ and the titles ‘Partner’ and ‘Partner Practice’ are marketing terms
To find out ways we can help visit: www.swtwealth.co.uk or contact us on 029 2252 0168 or 07946183512
SJP Approved 17/07/2023