Under current rules, if a person has assets of over £23,250 and requires residential care, they must pay for that care in full. Assets, which count towards this threshold of £23,250 include the family home, if vacant.
Therefore, if Mr Smith requires residential care but Mrs Smith is still living in the family home, it is ‘disregarded’ for the purposes of the financial assessment. However, if Mrs Smith dies and the property becomes Mr Smith’s outright and vacant, it is then taken into account and could be sold in order to pay for Mr Smith’s care.
Once assets of a care home resident drop below £23,250, the Local Authority start contributing towards the cost of care. If assets fall further, below £14,250, the Local Authority will take over payment of care costs in full. This means in the event of somebody paying for long-term care, assets of just £14,250 could be available to pass to relatives upon death.
In the Conservative Party manifesto, Theresa May revealed plans for social care to address an aging population. Although dubbed by critics as a “dementia tax”, the plans actually protect and preserve more assets for future generations than under the current rules.
One part of the reform which has been heavily criticised is that under current rules, if care is being received at home rather than in a care home, the value of the home is disregarded. The manifesto stated that even if a person is receiving domiciliary care, the value of the home will be included as an asset in the financial assessment – consequently more people will have to contribute to the cost of care.
Yet positively, the current threshold of £23,250 would be more than quadrupled – to £100,000. This means that once the value of capital assets (including the family home) drops to £100,000, the Local Authority start to contribute to care costs, so more of assets will be available to pass to future generations.
Under present rules, although a last resort, the Local Authority has power to force the sale of a property in order to access funds for care. The manifesto stated that nobody will have to sell their home during their lifetime and would be able to borrow money to pay for care, to be repaid from their estate after death.
With political uncertainty at the moment, it remains as important as ever to seek professional advice and consider what can be done to best preserve your estate, should the need for care ever arise. If you would like further information on ‘dementia tax’, then please do not hesitate to get in touch with me or a member of the Wills & estate planning team.