Paying for Care – A Short Guide
Dated: 01/11/2008
Normally, an elderly person who lives in a care home is required to pay all or part of the cost of their care based on criteria laid down in the Charging for Residential Accommodation Guide (CRAG).
A local authority is not required to charge for care where the period of accommodation lasts for fewer than eight weeks. After eight weeks, the local authority must charge at the standard rate and carry out an assessment of means to ascertain the appropriate level of charge to be made to the resident. A resident who refuses to be assessed will pay the full standard rate without contribution from the local authority.
The means assessment is based on the capital and income of the resident. The home of a resident is disregarded when they intend to return to it and it is still available for them to occupy or they are taking reasonable steps to dispose of it in order to acquire another home to which they intend to return after temporary residence in the care home. A property owned jointly with others will be considered to be an asset proportionate to the number of joint owners, so where there are three owners, a one third share of the total value would apply. There are special rules governing the valuation for assessment purposes of properties held in different legal forms or where the property is difficult to realise.
In general terms, financial assets are regarded as part of the resident’s capital but personal property is not, provided the purpose of the acquisition of the personal property was not to avoid the amount of assessable capital. There are special rules for some types of investment, such as insurance bonds.
Generally, the income assessment includes all income, although there can be exceptions where appropriate, such as, for example, for business income where the business is being sold.
When an attempt has been made to manipulate the income or capital of the resident to prevent it falling into assessment, for example by transferring an assessable asset, CRAG allows the local authority to make an assessment to recover the charge from the resident or a third party to whom the asset has been transferred.
Care home fees can rapidly deplete an estate and the key to preventing this is to make sure that the planning for the cost of care begins early. Contact Judy Dyke on 0121 693 2222 for advice on all aspects of wealth protection.