Chancellor Philip Hammond is coming under increasing pressure to raise more money to fund long-term social care. Dispatches released a programme on Channel 4 that aired on Monday night at 8.00pm on the so-called 'Dementia Tax'. The programme looked at why some people are selling their property to pay for care fees and why there are only certain people out there that are able to gain funds from the NHS. Should you be interested in watching the programme, it is available on Channel 4's catch up service.
Many people are unaware as to whether they will need to pay for care fees in the future and people do not think about these issues until later on in life, which may be too late. Currently, the law in England confirms that anyone with more than £14,250.00 worth of capital assets will be expected to contribute towards their care fees and those contributions will be means tested by the Local Authority.
To avoid paying for care fees, many individuals look to take steps before care is needed with a view to protecting their assets and in order to do so often sign their house over to their children. This is, however, not as beneficial as one might believe and will not necessarily remove the house from the means testing process. The Local Authority could argue that the person who gave the house away deliberately deprived themselves of the asset to avoid paying care and assess them as if they still owned the house. There are no time limits on how far a Local Authority is able to look back and the 'seven year rule' which is often discussed in relation to gifting only relates to Inheritance Tax. It does not apply to care fee assessments.
All is not lost however and it is possible to put Wills in place which protect part of your estate from care fee assessment. The Private Client team here at Gepp & Sons are happy to advise you on estate planning and care free protection and to discuss how we can help in more detail please contact me on 01245 228120 or Johng@gepp.co.uk for further information.
This is not legal advice; it is intended to provide information of general interest about current legal issues.