If I gifted my main residence to my children 7 years ago it won't have to be used to pay for my care if I have to go into a residential care home....
Firstly, if the local authority believe you have deliberately moved assets out of your estate to avoid paying care fees, there is no time limit to how far they can go back and deem that asset as still being owned by you when calculating the capital you have available to pay for your care.
Giving your home away to avoid paying care fees is known as ‘deliberate asset deprivation’ and if you give your house away six months before needing care it is likely the local authority will use the NHS and Community Care Act 1990 to reverse your gift. This means the property will be taken away from the person you gifted it to and once again becomes an asset belonging to you for means-testing purposes.
And be mindful that local authorities look unfavourably on property giveaways of those aged over 65 and are within their rights to try and prove ‘deliberate asset deprivation’.
The 7 year timescale is in relation to Inheritance Tax planning and assets no longer being counted in your estate for the calculation of Inheritance Tax payable on your death and so the ‘7 year rule’ does not apply when it comes to paying for care.
All is not lost and you do have options when it comes to planning for your later years. It’s always best to speak with an experienced adviser who can talk through all the options with you personally and this is where we come in...Penny Wotherspoon is a specialist in Long Term Care fees planning and an accredited later life adviser.
So get in touch, after all the worst time to find out you had choices about paying for care is once a large amount of capital has been eroded…and we see this happen far too often.
T: 0131 303 0053
* The system which is means-tested, states that if you have assets worth £27,250 (2017/2018) or more then you should pay for your own care, unless you have complex and unstable medical care needs you are entitled to Continuing Care NHS funding (the NHS pays for on-going healthcare not old-age or social care). If you have assets below £17,000 (2018/19) then the state will pay for your care and it will cover some of the costs if your assets are between £17,000 and £27,250. Of course in most cases, your property is included within your assets and with this in mind, most of us would be looking at paying for our own care.