How to Avoid Selling Your House to Pay For Care

Local authorities work hard to pay for care, but you can protect some of your assets to avoid the need to sell. This is possible with careful planning and working with an independent financial advisor.

Some people try to hide their wealth by deeding away their house or emptying their bank accounts, but this will be uncovered during the means test and classed as deliberate deprivation of assets.

Create a Care Fee, Will

The high cost of care is a concern for many elderly people and they may be worried that they will need to sell their home in order to pay for it. This is why it’s important to start planning and taking steps to avoid this from happening.

A big part of this involves creating a Care Fee Will, however, this isn’t the only thing you can do. When someone goes into care they will undergo a financial assessment to work out how much care fees they need to pay. They will take into account their income (such as pensions or benefits) as well as their capital, which includes savings and property.

If a person deliberately reduces their assets in the run-up to needing care this can be classed as deliberate deprivation and can result in the local authority deciding that they should not pay their care costs. However, this does not apply if the person was fit and healthy at the time that they gave their assets away and they did not do this in the hope of avoiding care fees.

If you want to protect your property from being used to pay for care fees it is worth seeking professional advice as early as possible. The advisor can then look at ways to plan your estate and change the way you own your property, which can include setting up a Trust Will or using a life interest trust. They can also advise on equity release and other financial products that can be used to mitigate the impact of care fees.

Put Your Home in Trust

One of the most common concerns among people approaching the end of their lives is whether they will be forced to sell their homes to pay for care. The good news is that you don’t have to. The key is to take early action and seek financial advice.

One popular way to avoid having to sell is putting your property into trust. This may seem like a foolproof strategy, but you have to be careful. If the local authority believes that you put your property into a trust solely to avoid paying for care fees, they will come after the assets in your trust to cover the costs of care.

Another option is to set up a deferred payment agreement with the local council. This arrangement allows you to use the value of your property to pay for care fees, but they will delay repayment until the property is sold or after your death.

Finally, it is possible to give away money or gifts before moving into residential care. However, this will have tax implications so it is important to get financial advice. For example, transferring your house to your children before you go into care will prevent them from getting a ‘step up’ in capital gains tax when they eventually sell the property. Putting your house into a revocable living trust can help avoid these problems by avoiding the transfer of ownership to family members.

Create a Deferred Payment Agreement

As the cost of care continues to rise, many people are considering their options for funding residential care. While it is impossible to avoid paying for care, there are ways to protect your assets and limit the impact of these costs on your family.

One way is to use a deferred payment agreement with the council. This allows you to use some of the value of your property to pay for care fees without having to sell your home. However, this option comes with some catches and should be carefully considered before deciding to proceed with this method of payment.

The first step in this process is to research the laws and regulations that apply to creating a deferred payment agreement. It is also important to understand the industry standards that are commonly used in this type of arrangement. Once you have a firm understanding of the applicable laws and regulations, you can move on to defining the terms of your deferred payment agreement.

This includes establishing the payment amounts, payment frequency, and due dates. You should also include any penalties for late payments. Lastly, you should create a signature page and make sure that all parties have signed the agreement. Once this is complete, you can check this off your list and move on to the next step.

Talk to an Independent Financial Advisor

Regardless of whether you are going into care yourself or planning for your loved ones to go into care, it’s a good idea to talk to an independent financial advisor. These experts will help you understand your options and avoid having to sell the family home to pay for care fees.

You should always choose an independent advisor who is licensed to practice and has a good reputation. They will be able to offer you unbiased advice and explain the different options available. They will also be able to give you an honest assessment of your situation, including your income, assets, and tax rates.

It’s important to ask how independent financial advisors are paid. Some, called “fee-based,” charge a fee based on how much money they manage. Others, known as “fee-only,” cannot receive commissions and are required to disclose any conflicts of interest upfront.

The cost of care is high, and it’s vital to make provisions early on. However, you should never feel forced to sell your house to pay for care fees. Even if your care costs are a significant amount, you may not be required to sell your home if you have qualifying dependents who can live in the house with you, such as a spouse or civil partner, an unmarried partner, a parent, or a child over the age of 60.

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