Fees are one of the most worrying factors when moving a loved one into a care home. You want them to have the best care and quality of life possible. However you’ve got to be realistic about what they can afford and for how long. This can be stressful for families but financially it is not your burden to bear.

While your inheritance may shrink when a relative goes into a care home, you are not personally liable to pay towards their fees, unless you volunteer to do so.

Are next of kin responsible for care home fees?

Legally, you are not obliged to pay for your family member’s fees. Whether they are your parent or spouse, blood relative or relative by law, unless you have any joint assets or contracts you are not financially involved in their care.

Top-up fees

If somebody really likes a care home that is out of their budget, they can ask a third party to pay a top-up fee. If a family member volunteers for this, or to pay the fees in full, they will sign a contract with the care home. When a family member does this, it is only when you sign that you become legally obliged to pay the agreed fee.

Davina Charlton is a solicitor with Nelson’s Law who specialises in care home fees, protection of assets and inheritance.

She warns: “Careful consideration needs to be given as to whether you can afford top-up fees for a relative.

“Care home fees often increase each year, not taking into account whether a local authority will also increase their funding by the same amount. This could lead to a situation where you would be paying even more to cover the difference in fees.

“You should also take into consideration your own financial circumstances and if they may change in the future resulting in you being unable to afford this top-up.”

Family assets aren’t included in the means test

When organising a care home, your local authority will conduct a means test to assess what your loved one can afford. This is a financial assessment that will look at the money they have in the bank, their properties, incomes including private and state pensions plus any other incomes, such as if they are a landlord. Only the person who needs care is assessed. The council won’t take any family members’ incomes into account.

Joint assets

The exception to this is if the person has joint assets, such as a joint account or mortgage. If that is the case, the local authority will take 50 per cent of each shared asset into consideration.

So if your mother needs care and she and your father have £20,000 in savings in their joint account, the local council will consider her to have £10,000 unless they can provide evidence to prove otherwise. However, if your mother and father both own a property jointly but only one of them goes into care, the property won’t be taken into consideration. This is because one party would still be living in the home.

Financial limits to qualify for funding

England, Scotland and Northern Ireland have upper and lower limits for care home and nursing home fees funding.

If your loved one has more than the upper limit in capital and assets, they will have to pay their fees themselves. This is called self funding.

If they have below the lower limit, the local authority will pay the fees. This is called state funding.

If they have more than the lower limit but less than the upper limit, their fees will be partly self-funded and partly state-funded.

The currents limits are:

England and Northern Ireland

Upper limit: £23,250

Lower limit: £14,250

Scotland

Upper limit: £35,000

Lower limit: £21,500

Wales does not have upper and lower limits. Instead, they have one limit of £50,000 if you want residential care or £24,000 for non-residential care, such as home care.

These limits are the same regardless of what care and support you need. However if you have higher needs, you may be eligible for additional financial support. For example if you need nursing care, you may be eligible for NHS Continuing Healthcare funding.

Overseas accounts

The local authority will take overseas assets into account in a financial means test. For example, if somebody worked intermittently in the US for some years, any properties or bank accounts they have in the US will count towards their capital. Expats may not necessarily be entitled to local authority funding as they have not paid National Insurance since they moved abroad; consult a legal advisor or your local authority if you are unsure how your situation applies here.

You don’t have to sell your parents’ house

For many people, selling the house they raised a family in to pay for care home fees can be devastating.  However, it may not be necessary.

If the person’s capital is less than the upper means limit, they can set up a Deferred Payment Agreement with the local authority. This means that the council will lend the person a certain amount of money depending on how much their house is worth. They will then claim the money back from the sale of the house once the person has passed away.

What is a Deferred Payment Agreement?

Davina Charlton explains: “A deferred payment agreement (DPA) means you can delay paying care costs until after your home is sold. The local authority would put a charge on your property meaning that once it is sold, they are entitled to the amount owed to them. A local authority would obtain a valuation of the property before the agreement is finalised.

“Administration and interest costs do apply with these arrangements and eligibility criteria need to be met in order to qualify for them but if you self fund care then the local authority has a duty to offer this option to you if you meet their criteria.”

“When you pass away, the amount due is a debt owed by your estate and the sum payable is due within 90 days after death. If a local authority believes that adequate steps are not being taken to sell the property they may legally enforce the debt to be paid.

“The debt would be payable by the estate once the property is sold or a family member may take on and pay the debt in order to keep the property.

“Interest does still accrue until the local authority is paid.”

If your parent dies, any outstanding care home fees should be paid for from their estate

When a person dies, the care home will issue an invoice for any outstanding fees. This is not for the family to pay, it will be taken from their estate, such as remaining money in their bank account.

Can I give my house to my children to avoid care home fees?

Some people think that transferring their property to their children may prevent it being taken into consideration when their assets are being considered for the payment of care home fees.

Ms Charlton of Nelson’s Law warns: “The risk of this is not only transferring the property out of your name and running the risk of falling out with your children and being asked to leave the house but if your child goes through divorce or bankruptcy, that asset would be taken into consideration.

Deliberate deprivation of assets

“A local authority may also look at this transaction too and find that it was transferred meaning there was deliberate deprivation of assets.

“Trust companies also advertise property trusts which guarantee to protect properties from being taken in payment of care fees however, these companies are usually unregulated and cost thousands of pounds.”

Care home fee planning trusts can also be a waste of money. Ms Charlton emphasises: “They aren’t concrete, because if a local authority believes that the house was put into a trust purposely to prevent it being used for care fees, they may deem this to be deliberate deprivation of assets and reverse the long and very often expensive process of setting up the trust and the property could still be taken into consideration.”

You can watch a video here which explains your legal rights around your parent’s care home fees