The Property Dilemma
Where a Care Recipient owns savings and /or investments along with their property it
is often a simple task to allocate funds from those savings to pay for one of the many forms of
Care.
However, in many cases, an elderly person's only asset is the home they live in.
Local Authorities will insist that where no spouse, elderly relative or dependent individual lives
with the person requiring Care, the house forms part of the financial assessment to determine the
liability for the payment of Care fees. Unless the property, together with any other assets, is
valued at £23,000 or less (unusual) the elderly person will have to use it in some form to pay for
those fees, with no support from the Local Authority.
In the majority of cases the people making the decision on just how the property is
utilised are the members of the Care Recipient's immediate family.
There are emotive issues involved where the family home may be the only asset.
Perhaps there is the hope that a stay in care may only be temporary, or that some other last minute
solution can be found. Maybe the property can be rented out to cover the shortfall in fees
payments?
Once these and other possibilities have been eliminated the families will usually, but
reluctantly, reach the decision to sell.
But the problems may not end here unless the family is prepared to move swiftly.
Let's look at an example.
Mrs A requires care in a residential home at a cost of £600 per week. She has an
income totalling just £135 per week, comprising her basic State Pension and Attendance Allowance
paid at the higher rate. Her property is valued at £140,000 and is her only asset. Mrs A has been
advised that the Local Authority will ignore the value of the property for the first 12 weeks of
her stay in care. She has been in care for one week:
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Scenario 1 (Pass)
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Scenario 2 (Fail)
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Jan 20th
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First appointment with Care Consultant. Initial medical information is gathered and
a Long Term Care Calculator is used to determine the best route forward. An Immediate Care Plan is
recommended, but this must be funded from house sale proceeds. Medical forms are sent off the same
day, and Estate Agents are instructed the same week.
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Jan 20th
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First appointment with Care Consultant. Initial medical information is gathered and
a Long Term Care Calculator is used to determine the best route forward. An Immediate Care Plan is
recommended, but this must be funded from house sale proceeds. Medical forms are sent off the same
day. Family uncertainty delays instructing an Estate Agent.
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Feb 20th
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Medical information is correlated and sent to all companies offering Immediate Care
Plans for quoting purposes. The property is on the market, has received 5 viewings, and 2 are
considering an offer.
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Feb 20th
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Medical information is correlated and sent to all companies offering Immediate Care
Plans for quoting purposes. No firm decision has been made on placing the property on the market
'until mum settles in'.
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Mar 6th
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All quotations are now received and the Care Consultant has prepared a report
confirming his original recommendations and including accurate costs of the least expensive
Immediate Care Plan. An offer on the house has been accepted at the full asking price of
£140,000.
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Mar 6th
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All quotations are now received and the Care Consultant has prepared a report
confirming his original recommendations and including accurate costs of the least expensive
Immediate Care Plan. No decision on the house yet, but no hurry because Social Services are paying
fees for the time being.
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Mar 28th
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House sale completes and Care Consultant completes any outstanding paperwork and
cheques. The money is taken to pay for the Immediate Care Plan, and the remaining money (after
expenses and setting aside of cash) is invested on behalf of Mrs A to cover unforeseen situations
and to provide a legacy for the family, hopefully for the distant future.
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Mar 28th
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2 weeks of the property disregard period are left and as yet, no action has been
taken on the property sale.
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Apr 11th
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Everything is complete, and the transition between Social Services temporary funding
and Private funding has been handled smoothly. All parties are happy, Mrs A has the care of her
choice for the remainder of her life, and she has also provided the legacy for her children that
she always hoped would be there.
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Apr 11th
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The 12 week disregard period is up. Reluctantly the family admit defeat and place
the property on the market. However, the care home starts to ask for the fees shortfall and there
are no immediate funds available.
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Jul 5th
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The property sale finally completes, but the family have run up a debt of almost
£6,000 to the home and got off to a poor start. Their potential inheritance is therefore reduced
accordingly. In addition the terms of the original quotes from product providers have expired, and
new quotes have to be obtained, resulting in further delays and therefore cost.
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As you can see, the 'Pass' scenario allows families to move smoothly forward and
provides total peace of mind. The decision to sell is often a hard one, but necessary to ensure
that funds are available to solve the problem of Care Fees shortfall.
