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Can my mother avoid using her home to fund care costs?

My mother is 82 and her health is failing. I think she will end up in a residential care home. She is concerned all of her money will be spent on care. Her home is worth £400,000; she has £50,000 in a savings account. She has discussed transferring her house to my siblings and me. Can she do this and will it prevent her home being used for care costs?

Emily Robertson, a wills and probate specialist at solicitors Burgess Mee, says the need to provide care for relatives can create some hard decisions for families. Clients often want to pass their entire estate to their children rather than be spent on care costs and depleted by inheritance tax. Emily Robertson, a wills and probate specialist at Burgess Mee When an individual needs access to care, their assets are means tested. This includes an assessment of both income and capital. A decision is made as to whether care should be funded by the individual, the state or a combination of the two.

Currently, the upper limit in England for a contribution from the state is £23,250. The lower limit where care is paid for by the state is £14,250, though where care is provided at home the local authority has some discretion. These caps are set to rise significantly from October 2023. Given the cost of residential care, even the higher limit may not cover the cost in full.

From her assets, your mother will probably be self-funding her care. You may wish to consider whether residential or at-home care is more appropriate. Her liquid assets would be used initially, but it may then become necessary to sell her home to fund any balance. Therefore, I understand why she would want to pass her home to you and your siblings. Regrettably, she may fall foul of the intentional deprivation of assets (IDA) regime.

The care and support statutory guidance states that IDA occurs where an individual has intentionally deprived or reduced their overall assets in order to cut the amount they are paying for their care. An individual needs to be aware that they are going to require care and support and have transferred assets out of their estate to reduce their contribution to care. A local authority would investigate this. If they find that deliberate deprivation has occurred, they could include the asset in the means test or try to recover care costs from the person who now owns the asset. As your mother is aware she may need residential care and would like to transfer the property to reduce her contribution to care costs, she is likely to be caught by the IDA regime.

Posted: 9th August 2022