HM Insights

Who cares? The current rules on paying for residential care in later life

On Thursday 8 June 2017, we head to the polls once again in the General Election. Brexit continues to dominate the political agenda, but there remains no clear commitment from any of the political parties on social care reforms, albeit that the issue has been a major point of contention during the campaign. Should we care?

Two recent statistics indicate we should. The population in Scotland is projected to increase to 5.7 million by 2039. In that same period, the number of people aged 65 or over is expected to increase by over 50%. The current social care system originates from primary legislation dating from the 1940s and 1960s. It is clear that changes are required in order to deal with our country's aging population. Until that time however, the current system remains in play. With that in mind, this is a timely reminder of some key points to bear in mind.

Elderly Care Local Authority Council Care Home Pay Duty

The three payment tariffs for residential care

There are three payment tariffs for residential care, all of which are based on the capital assets owned by the resident.

  1. In 2017/2018, if a resident owns capital assets over the upper limit of £26,500, then he or she will be assessed as being liable for the maximum cost of care.
  2. The lower limit currently sits at £16,500, below which the cost of care is met by the Local Authority.
  3. Where the resident is assessed as owning capital assets between the lower and upper limits, then the tariff income applies which assesses the resident as paying £1 for every £250 of capital owned over £16,500.

Given the upper limit and with the average house price in Scotland currently sitting at around the £164,000 mark, it is not difficult to see that any home-owner who requires residential care in later life is likely to be liable for the full cost of that care.

The main area of controversy on care costs however remains deliberate deprivation.

What is deliberate deprivation and what does it mean for you and your beneficiaries?

Deliberate deprivation is where a significant motivation behind a resident's decision to dispose of his or her capital assets is the resultant reduction of his or her liability towards the cost of care. If a Local Authority decides that deliberate deprivation has taken place, the value of the asset can be notionally included in the resident's financial assessment.

Say the asset was the resident's former home. If that were the case, you can quite easily see how the notional value of that property would push the resident into either the tariff income or, more likely, beyond the upper limit.

There is no time limit as to how far back a Local Authority can go when looking at capital assets which are no longer in the resident's possession. However, if the disposal took place at a time when there was no reason to suspect care would be required, then it could be argued that a significant motivation behind the disposal was not to avoid care, since care was not in contemplation.

The timing of the disposal is also important for this reason. If the disposal took place within six months of the resident going into care or whilst the resident is in care, then the Local Authority can also pursue the beneficiary (or beneficiaries) of the asset in order to recover the cost of the resident's care. The resident remains liable for the cost of care, but the legislation creates a secondary route towards payment.

Early estate management - dealing with capital assets properly

Care and attention is therefore required when dealing with capital assets in the context of residential care in later life given the wider consequences post-transfer.

Early estate management remains vital, but that ship might have sailed, leaving you to fight a rear-guard action. Whether you are a potential resident or a potential beneficiary or even a local authority, early legal advice is strongly recommended in order to navigate your way through the many pitfalls in the existing care system.

Our specialised advisors are able to assist and are available to discuss your circumstances with you.

Get in touch

If you would like to discuss this, or any other related matter, please get in touch with a member of our team.