How to avoid selling your house to pay for care

In the UK, there is the big problem of older people ageing and not having the right funds to pay for their older years. Unfortunately, things like pensions and help from the government aren’t sufficient.

Especially if there isn’t any help from family members whether that be to directly pay for care or for family members to help with the actual labour of the care of a family member in their older years.

Hence, a lot of older people end up having to sell their house to raise finance to pay for care and this can cause a lot of problems as it gets rid of the asset that someone has built off for years.

In this article, we will be exploring the ways you can avoid selling your home in this way so you can secure your financial future and protect your future investments.

From avoiding paying for care homes altogether to going over the costs of care so you can attempt to reduce them, perhaps without the help of an estate agent, this article covers it all.

How to avoid paying for care homes altogether

Perhaps the most effective method for preventing the sale of a house to pay for care home fees is to avoid paying for care homes altogether. This can be done in a few ways including the release of a home’s equity.

Equity release as a means to prevent care home charges

In order to get rid of the expense of care home fees, many individuals explore the option of utilising equity release which involves withdrawing funds from their property. 

To determine the exact amount of money you will be able to take out of your property tax-free, it is suggested that you use some form of equity release calculator like the one you can find here.

As well as this, it is useful to attempt to understand how equity release works so you don’t have to rely on figures given to you from the internet. 

Or you can hire a solicitor or mortgage broker to help you further. If you are looking to renovate your home before doing an equity release, be sure to check out our article on what not to fix before selling a home so you don’t waste money.

What does the cost of care entail?

To avoid having to sell your house to cover care costs, it is crucial to fully understand the expenses associated with care. 

In some cases, the council will conduct a standard means test to determine your financial situation, including any savings, investments, pensions, and property value. Read more about this on the government website. 

If your total assets exceed £23,250 (only applies to England), you will be responsible for your care fees for the rest of your life.

However, if your financial resources fall below these thresholds, you may qualify for assistance from the council, but you may still be required to contribute towards these payments.

Care home expenses can range from approximately £30,000 to £60,000 annually, depending on the level of care and individual preferences. 

This is why it is becoming more prevalent to safeguard all of your assets ahead of time and comprehend how to avoid selling your home in the event of requiring care as it can take quite long to sell a house anyway.

Common mistakes about the costs of care

The expenses associated with care can be complex and daunting to understand, and as a result, many individuals make errors that can have significant consequences.

Here are some of the most common mistakes made when it comes to the costs of care because many don’t understand how to benefit from the government and still keep their home.

You cannot:

Transfer the ownership of your property

Signing over your home or financial assets to friends or family to evade care fees is not permitted when you opt to reside in a care home.

There are legal ways to accomplish this, which we will discuss later, but it is not a decision that can be made on a whim or within a few months of entering a care home.

Give away or spend your funds or assets

In the same way, transferring your funds, assets, or property is viewed with scepticism.

This encompasses giving substantial sums of money to relatives or acquaintances, and purchasing luxurious items that cannot be considered in your means test.

Conceal the assets you own

If you’re thinking about hiding your wealth to avoid paying care fees, think again. It’s not a good idea to conceal the truth about your finances or dispose of your assets in a shady way. 

During the means test, any undisclosed funds or assets will be tracked and taken into account and if it is found that you are hiding assets then the council could take legal action.

In fact, trying to get rid of your assets on purpose is known as a “deprivation of assets.” This term refers to intentionally giving away or disposing of your assets in an effort to lower your overall capital.

As a result, you will be able to qualify for council-funded aid to cover your long-term care expenses. However, this practice is not approved and can have serious consequences.

Avoid paying for care with a care fee will

A great way to protect your home and other assets when it comes to long-term care is by creating a Care Fee will. It’s a legal way to secure a property and better yet it’s pretty straightforward.

It works by giving a share of the home to a spouse and you ensure this by giving your share of the home to your spouse in trust for life rather than directly.

You can specify this in your will if you and your partner own the home together, with or without a mortgage. It’s important that the property is owned as ‘tenants-in-common’.

This essentially means that both of you have an equal 50% share of the home.

What are the most important questions to ask when avoiding care home fees?

There are a range of questions that should be asked before anyone goes into care and considers selling their home. 

These questions are in addition to any other basic information you should be aware of like the alternatives to selling your home or the financial resources available for those who want to sell.

What is the savings threshold for care home fees before being responsible for fees?

If you’re wondering how much you might have to pay for care in the UK, here are some figures to keep in mind.

In England and Northern Ireland, the threshold for savings and assets is £23,250. In Scotland, it’s a bit higher at £28,000. Meanwhile, in Wales, it’s £24,000 for home care or £50,000 for a care home.

If you have savings and assets above these thresholds, you’ll likely have to pay for your care. And if you share your home with a spouse or partner, you’ll need to take their circumstances into account too.

It’s important to note that these thresholds include any savings and income, such as a pension. 

In addition, if you move into a care home on a long-term basis, your property may be counted as capital after 12 weeks (unless your spouse or partner still lives there).

Once your savings fall below £14,250, only income is considered for a means-assessment.

So, it’s a good idea to think about how you invest your savings to ensure they work as hard as possible for you. That’s why we strongly recommend getting financial advice.

How can you not sell your property when going into care?

One option that some people explore is putting their house into a trust, which can help them avoid care fees and pass their home on to their children as talked about above. 

Nonetheless, this is not always straightforward, and your local authority may investigate whether you’ve put your home in trust just to avoid care costs.

The key is to make the right decision at the right time. With careful planning, you may be able to keep your property, leave an inheritance, and even have some disposable income.

However, selling your house on its own is not a guaranteed solution to avoiding care fees, unless you have specific financial circumstances or if your family home is already in trust.

Is transferring ownership of a house to avoid care costs considered intentional deprivation of assets?

It’s worth noting that your local authority or council will assess whether you’ve given away your assets intentionally to avoid paying for care. 

If they suspect that you have, they may still include those assets in their calculations and charge you accordingly.

But there is always the option to challenge their decision. Local authorities can sometimes make mistakes so, if you believe that their assessment is unfair or inaccurate, you can challenge it.

This can be a complex process though, so it’s a good idea to seek legal or financial advice as a professional can help you understand your options and guide you through the process.

In any case, it’s always best to be transparent and open about your financial situation. Trying to hide or manipulate your assets could end up causing more trouble than it’s worth. 

What falls under the category of deliberate deprivation of assets?

The deliberate deprivation of assets is something you’d always want to avoid. 

Some examples of this include:

• Giving away money to someone, either within or outside of your family
• Transferring ownership of your home to a family member to avoid being included in financial assessments
• Spending large amounts of money on things that are out of character, such as expensive jewellery or a car
• Gambling with your money

These are just a few examples, but there could be others. The point is that local authorities will look at your financial behaviour and try to determine whether you’re trying to reduce your assets to avoid paying care fees.

How can I lower the value of my assets and property to avoid care home fees?

The lower the value of a property is the better when it comes to avoiding the fees that come with care homes. This is because you can reduce the fee you have to pay to the local council.

Some ideas for reducing the value of an asset include:

• Setting up a trust
• Repaying any mortgages and debts
• Spend some money on living expenses
• Purchasing an investment bond with life cover

How financial help from care costs works

If your income and savings fall below a certain threshold, you may be eligible for assistance with your care costs. The assessment is done through a means test. If you or a qualifying dependent no longer lives in your home, its value will be factored into the means test. However, if someone still occupies the home, only your other assets will be considered. It’s important to note that the government has planned social care reforms for England from 2023, which will include changes to these thresholds. For now, the information outlined above still applies. Check out our social care reforms guide to learn more.

Table showing limits for receiving financial help

To summarise

To round this article up, you should now be clear on the guidance on how to avoid selling your house to pay for care in the UK. 

Older people in the UK often do not have sufficient funds to pay for their care, and may end up selling their house to raise finance to pay for it and this is something that should be avoided if possible. 

So, make sure you find some of the suggested ways to avoid selling your home

Including avoiding paying for care homes altogether, using equity release to withdraw funds from your property, understanding the expenses associated with care, and creating a Care Fee will. 

Finally, be sure to avoid the common mistakes people make when it comes to the costs of care, such as transferring the ownership of your property or giving away or spending your funds or assets could lead to additional costs of selling too.

Consider all things carefully and make a well rounded decision that is best for you.