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Treatment of Property and Capital for People in Care Homes |
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Treatment of capital and property for people in care homes by the local authority in England This is intended for information purposes only and is a summary of the relevant guidance. Specific advice should be sought for specific cases; Carers in Hertfordshire cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this article. Further information sources are listed at the end. The figures quoted below relate to 2007/08 - these figures will be updated for 2008/09 as soon as possible. Most people aged 18 or over are expected to pay for some or all of the costs towards their care in residential homes from their own income or capital. There are 3 main exceptions to this:
The Local Authority Social Services Department If the Local Authority social services department has assessed the person is in need of residential care, they will usually apply a “means test” or financial assessment to calculate how much a resident will contribute towards their care home fees. The rules that govern financial eligibility for assistance with home care costs are written in CRAG – charging for residential accommodation guide1. Capital For 2007/08 the upper capital limit in England is £21,500. Residents with more capital than this will have to meet the whole cost of their care home fees themselves. Once their capital drops to below this level, they will have to pay an assessed contribution towards the cost, depending on their income and savings. Most forms of capital and savings are included in the means-test including bank, building society accounts, national savings accounts, premium bonds, stocks and shares and property. The capital limit is the same for temporary and permanent residents. It is only the resident’s capital that counts. If capital is in a joint account, half is assumed to be resident’s. Please refer to Age Concern3 Fact Sheet 39 for more information on couples and paying for care. Certain types of capital are disregarded: For example:
A weekly “tariff income” applies to capital over £13,000 and under £21,500 of £1 per £250 or part thereof. Deprivation This is the deliberate disposal of capital or assets in order to avoid or reduce the resident’s contribution to their care home fees. The LA can treat the capital as if the resident still has it and this is called having ‘notional capital’. If the transfer of assets took place up to six months before you entered the care home, the LA may try to claim the fees from the person you have given the assets to. If the transfer took place more than six months ago, the LA may look into recovering the fees from you personally, even though you don’t have the money any more. The LA is concerned with proving the intention behind the transfer of assets, and could look at any transfer that happened a few years ago. It is very important to get expert financial and legal advice if you want to transfer capital or assets to someone else. The transfer may put other limitations on what you want to do in the future. For example, buying a smaller house or moving into sheltered accommodation. As most elderly people live independently and do not move into a care home, it is important to think about keeping your home and capital in order to stay in control over your own financial affairs. Please refer also to Help the Aged Fact Sheet2 for more information. Income: The LA has guidelines as to which forms of income are treated in full, partly or disregarded. Please refer to Age concern Fact Sheets3 or CRAG1. Treatment of property in the local authority means test. Temporary stays The value of a resident’s home is not included in the means test for any temporary stay in a care home. Permanent Care If the resident goes into permanent residential care, any interest in his/her former home will generally be taken into account as capital. There are exceptions to this. The value of the former home will be disregarded (ignored) if it is occupied by:
Discretion to disregard property - carers The Local Authority also has a discretionary power to disregard the value of the property where it is the home of someone else not included on the above list4. This discretion needs to be balanced with the need of the LA to ensure that residents with assets are not maintained at public expense. The authority does not have to exercise this power but should give individual consideration to any requests to do so. Examples of where such discretion may be used are:
This discretion can be reviewed at any time. If the value of a property was disregarded because a long term carer was living there, then the LA may begin to take this value into account if this carer dies or moves out. Sons and daughters who have been caring for years, but have never moved out of the parental home are often disadvantaged. 12 Week disregard The Local Authority has to disregard the value of the home for the first 12 weeks from the date of a resident’s admission to permanent care. If you enter a care home on a temporary basis and then a decision is made that your care is permanent, the 12 week disregard runs from the date the stay counts as permanent. If your property is sold within the 12 week period, the disregard ceases to have an effect from the date of sale, and the proceeds will be counted as capital. The LA should inform you about this mandatory disregard and you are entitled to complain if it fails to do so. Property taken into account If the property is not disregarded, the value will be added to any other capital owned by the resident. As stated earlier, any residents with capital over £21,500 will be treated as self-funders, able to fund their own care. The local authority can usually assist with payments in the interim, before the property is sold. It will arrange to be reimbursed once the property is sold, usually via a legal charge. Legal and Beneficial owners The treatment and valuation of property that is not disregarded depends on whether the resident is a legal or beneficial owner of the property. A legal owner is the person in whose name the property is held. A beneficial owner is one who is entitled to receive the proceeds of the sale. Often the legal and beneficial owners are the same person, but there are exceptions. For example, the legal owner may be holding the property on trust for the beneficial owner and have no rights to the proceeds of the property. Joint Beneficial Ownership The assessment of interests in jointly owned property is complex and could be the subject of an article on its own. In CRAG1, there are two main factors that govern the value of a resident’s beneficial interest. One is your ability to reassign (sell) your share of beneficial interest to someone else, and the other is there being someone willing to buy your beneficial interest. Sometimes residents are joint beneficial owners with their son or daughter so each has a right to receive some of the proceeds of the sale. The LA can only value the resident’s share of the property based on whether a willing buyer would buy a part share. If no-one is willing to buy this share, the value of it could effectively be nil. CRAG recommend obtaining a professional valuation from a qualified property surveyor if there is any discrepancy between what you feel the value of your share of beneficial interest is and that valued by the LA. For more information about joint beneficial ownership read Section 3 of Counsel and Care Factsheet5 and seek expert legal advice. The following give more detailed information. All Fact Sheets can be downloaded from the websites listed. Footnotes 1 CRAG – Charging for Residential Accommodation Guide April 2007 can be viewed online at Department of Health website or requested from DH Publications Orderline, PO Box 777,London SE1 6XH 2 Help the Aged Tel: 020 7278 1114 www.helptheaged.org.uk Information Sheet 10 Paying for your care home Seniorline freephone 0808 800 6565 free welfare rights advice and information service for older people and their carers 3 Age Concern Tel: 0800 00 99 66 website: www.ageconcern.org.uk Fact Sheet 10 Local authority charging procedures for care homes April 2007 Fact Sheet 38 Treatment of the former home as capital for people in care homes April 2007 Fact Sheet 39 Paying for care in a care home if you have a partner April 2007 Fact Sheet 40 Transfer of assets and paying for care in a care home June 2007 4 Hertfordshire County Council – Adult Care Services (ACS) www.hertsdirect.org “Paying for Residential Care” Leaflet or Tel: 01438 737400 for a copy. 5 Counsel and Care Tel: 0845 300 7585 www.counselandcare.org.uk Fact Sheet 16 Care Home Fees: Paying them in England |
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