insideKENT Magazine Issue 36 - March 2015 | Page 152
ADVERTISEMENT FEATURE
CAN WE BE SURE WE CAN LEAVE THE
HOUSE TO THE CHILDREN?
Care funding under the new law – your essential myth buster
You know it, I know it – the present system for
funding care in later life is broken. Successive
governments have known this too, which is why,
after much deliberation, the Dilnot Commission
proposed a new regime which promised to cap
the amount that people would have to pay
towards care costs. The Chancellor also boasted
that the reforms would ‘end the scandal of people
being forced to sell their houses during their
lifetime’. The government packaged up the
proposals in the Care Bill.
Now that Bill has become law, its provisions will
come into force by April 2016. How much will
change? Are we really going to stroll into the
sunlit uplands of fair and affordable care for all?
Can we be sure we can leave the house to the
children? For answers to these pressing
questions, read the myth busters below.
“There will be a limit on the amount I have to
pay for my care.”
There is already a limit today – but it’s miserly,
and beyond it, the system offers no cap on what
you might have to pay for your social care.
The new law will require the Local Authority (LA)
to contribute to the cost of your care at an earlier
stage than at present, and will introduce a cap
on the amount you have to pay for the cost of
your social care, but only if your care needs are
sufficiently high.
If your savings and your property (unless it is
disregarded) are worth more than £118,000, you
will pay for all your care. However, if your care
needs are judged to be substantial enough, once
the running total of your social care costs has
reached £72,000 (the ‘care cap’), your LA will
take over payment of that element of your care.
But you will continue to pay the ‘hotel costs’
until your capital drops below the £118,000 limit.
Then the LA will help towards these costs. When
your capital drops to £17,000, you will not be
expected to use any more of it, but in most
cases, you will continue to pay over most of your
income.
“So, will the LA take over the cost of my
social care once I have spent £72,000 on it?”
No – it will only do so if your care needs are high
enough and if the LA itself would have spent
£72,000 on meeting those needs. What you pay
while you are in care is irrelevant. And if your
care needs do not meet the government criteria
(which is likely to apply only to those with
‘substantial’ needs) then there is no limit on the
cost of care – until of course, your assets fall to
£17,000 in value. Therefore, if you only have low
or moderate needs for care, the new care cap
is not likely to be of any help to you.
“But I won’t have to sell my house to pay for
care now?”
This much-trumpeted aspect of the new law
applies from April 2015. Initially, it seemed to
offer salvation to those who lived on their own
and then go into care. But there is one vital
element that must be understood: the change
does not guarantee to ‘save the house for the
children’. If your savings are less than £23,250,
it just requires the LA to lend you money for care
against the security of your home. But when you
die, your home will usually have to be sold to
repay the loan. So all it really does is delay the
time when your home is sold to cover the cost
of care, if you need to resort to this capital. T
oday,
the LA has a choice about whether to lend you
money against your home – under the new
regime they will be required to make the loan.
However, it is likely that the LA will charge interest
at around 4%, whereas today they cannot.
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These elements of the new Act are out for
consultation in the autumn, so expect more
debate on the detail then.
Don’t forget however that just as today, you will
not have to sell your home if your spouse or
partner (or another relative who is over 60 or is
disabled) is still living there. In these
circumstances, the LA must disregard the value
of the home altogether. Likewise, those who
have complex and substantial health needs
requiring on-going care will receive free NHS
Continuing Care.
Jill MacMahon is a solicitor specialising
in wills, trusts and inheritance tax planning.
Contact Jill for further information:
[email protected]
0208 290 0440
www.thackraywilliams.com