HM Insights

Home sweet care home: Do I need to sell my house to pay for care costs?

In April this year, the Scottish Government released revised guidelines on 'Charging for Residential Accommodation'. This guidance is useful if you (or a relative) unfortunately end up in a position where you need to pay for care costs. However, as always the law is complicated and daunting to try and understand.

Perhaps most people's biggest concern is that they believe they will have to selling their home to pay for care. So let's see if this is true.

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Measuring your capital assets

A council will look at the capital assets a resident has when they make an assessment and then determine from this if they are entitled to the Local Authority (LA) paying for the cost of their care. The guidance sets out upper and lower capital limits. Your capital is anything which isn’t income - things like buildings and land - but also savings in bank accounts, building societies or stocks and shares.

There are three possible brackets:

  1. The lower limit £17,000 – if a resident has capital assets of under this amount, the LA will meet the total care cost.
  2. The upper limit £28,000 – if a resident has capital assets of over this amount, they will be assessed as being liable for the cost of their care themselves.
  3. If their assets sit at a figure in-between these two amounts then the tariff income applies which assesses the resident as paying £1 for every £250 of capital owned over £17,000.

Disregarding the value of your home

With the average price of a house in Scotland around £150,000, most people assume that without selling their home it would be impossible to get below the £28,000 limit and gain some help from the LA with their care costs.

However, the guidance sets out a number of scenarios where the value of your home is disregarded so you do not face having to sell your home to pay for temporary or permanent care costs.

Most importantly, if your stay in care is only temporary then the value of your home is ignored when calculating your assets. This is because it makes little sense to force someone in to a position where they face selling their home to pay for temporary care, leaving them with nowhere to go when they return to health.

If, unfortunately, a resident ends up in care permanently, the value of their home is disregarded for first 12 weeks of their care.

It is important to remember that to gain financial support from the LA, once the value of your home has been disregarded, your capital assets held elsewhere, must still fall below the upper limit of £28,000.

Are there other scenarios where property can be disregarded?

If the resident's partner still occupies the house, then the value is not taken into account. Or perhaps a relative stays in the house and needs security of home because, for example, they are over 60, a child or incapacitated? The guidelines set out various scenarios and the LA has a discretionary power available even if you don’t meet any of them.

It may also be possible to get the cost of your care deferred. This means creating a legal agreement between you and the LA to defer payment until after your death. At such a time your house can be sold as part of your estate and release necessary funds to meet your care costs.

Planning ahead

The rules are complicated and require careful thought and calculation. It is always good to plan ahead and have thought about how you will fund care costs if need be. Knowing if you would be entitled to the LA helping with your care costs will reduce stress on you and your family in the future.

And the chances are you won't need to sell your family home.

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