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All Your Care Fees Questions Answered.

How is it decided how much is paid?

If a Local Authority has assessed an individual as requiring care it must also assess the individual's financial resources to see how much he is able to pay towards the cost of meeting those needs (section 17, CA 2014).

If the LA decides to charge for the care provided it must follow the Care and Support (Charging and Assessment of Resources) Regulations 2014 (SI 2014/2670) and the CSSG when working out how much the individual pays. The amount an individual is expected to pay for his care depends on whether:

He is cared for in a care home or in his own home (this affects the rules about assessable income)
The value of his own home is:

disregarded (because it is occupied by a spouse or dependant relative); or

taken into account.

The individual has decided to top-up the basic LA care provision (for example, by choosing a larger room in a care home or by choosing a more expensive care home).

​Upper capital limit

Where an individual clearly has capital in excess of the upper limit the LA will not make any further assessment of his financial resources. If the individual is near the upper limit the LA should plan ahead for when capital has been used up to pay for care costs so that is falls below the upper limit. The upper limit will change when the cap on care costs is introduced.

Tariff income

Where an individual has capital resources with a value in excess of the lower limit the LA must apply a tariff so that, for every £250 of capital (or part of that amount) above the lower limit and up to the upper limit , the individual is assessed as being able to contribute £1 a week towards his care costs.

Lower capital limit

Where an individual has capital resources with a value below the lower limit they do not need to contribute to the cost of their care from their capital at all. The lower limit will change when the cap on care costs is introduced.

Deferred payment agreements

Before the Care Act 2014("CA 2014"), local authorities had a discretion whether to offer to defer the payment of care costs until after the individual's death by taking a charge over the individual's assets. CA 2014 imposes an obligation on local authorities to offer deferred payment agreements to individuals who meet all three of the following criteria: 

Their needs are met in a care home. 

They have less than £23,250 in capital assets (excluding the value of their home). 

Their home is not disregarded when assessing how much capital they have. 

Local authorities also have discretion to offer a deferred payment agreement more widely to individuals who do not satisfy these criteria. 

In deciding whether to exercise this discretion the Local Authority may wish to take the following considerations into account: 

Would selling the individual's home leave them with very few accessible assets?

Does the individual intend to use the wealth tied up in their home to pay for more than the basic care provision?

Does the individual have any other accessible means of meeting care costs?

Is the individual very near the capital limit? 

An individual cannot use a deferred payment agreement to finance mortgage payments or payments for supported living accommodation (such as a warden-assisted flat). 
Where an individual uses a property as security for a deferred payment agreement, the equity limit is set using the following formula:

((Value of property - existing mortgages and other encumbrances) x 90%) - £14,250. Only the value of the equity retained by the individual is considered when setting the limit on what amount can be secured.
Deferred payment agreements in existence before 1 April 2015 remain undisturbed.
 
Care Act 2014 - Disregarded Capital
The following assets are considered to be disregarded capital where an assessment for longer term residential care is made:
Property that is the individual's own or only home where:

he is cared for outside a care home;

he is in a care home on a temporary basis and intends to return to his own home or is taking steps to sell it and move to a more suitable home; or

his home is occupied (continuously since before the individual went into a carehome) by a non-estranged spouse or partner, lone parent (who is the individual's estranged or divorced partner), or qualifying relative who is aged 60 or over, a child under 18 or who is incapacitated. The occupation criterion for qualifying relatives is applied at the time the individual goes into care.

Surrender value of a life insurance policy or annuity (including the value of cashing-in rights given as part of the options for total or partial surrender of an investment bond.

Payments of training bonuses of up to £200.

Payments in kind from a charity.

Personal possessions (unless purchased to avoid care costs).

Capital treated as income.

Student loans.

Value of funds held in a personal injury trust or administered by a court that derive from a payment for personal injury.

Subject to the rules on assessable income, periodic payments payable as a result of a personal injury.

Subject to the rules on assessable income, the value of a right to receive any of the following:

-annuity income;

-outstanding instalments under an agreement to repay a capital sum; 

-payment under a trust where the funds derive from a personal injury; 

-income from a life interest under a trust;

-income (including earnings) payable in a country outside the UK that cannot be transferred to the UK; 

-an occupational pension; and

-rent.

Payments derived from:

-the Macfarlane Trust;

-the Macfarlane (Special Payments) Trust;

-the Macfarlane (Special Payment) (No 2) Trust;

-the Caxton Foundation;

the Fund (payments to non-haemophiliacs infected with HIV);

-the Eileen Trust;

-the MFET Trust;

-the Independent Living Fund (2006);

-the Skipton Fund; or

-the London Bombings Relief Charitable Fund.

-Social Fund payments.

-Refund of tax on interest on a loan that was obtained to acquire an interest in a home, or for repairs or improvements to the home.

-Any capital resources that the individual has no rights to (as yet), but that will come into his possession at a later date.

-Payments from the Department of Work and Pensions to compensate for the loss of entitlement to Housing Benefit or Housing Benefit Supplement.

-Amount of any bank charges or commission paid to convert capital from foreign currency to sterling.

-Payments to jurors or witnesses for court attendance (but not compensation for loss of earnings or benefit).

-Community charge rebate or council tax rebate.

-Money deposited with a Housing Association as a condition of occupying a dwelling.

-Child support maintenance payments.

-The value of any ex gratia payments made on or after 1st February 2001 by the Secretary of State because of an individual's (or their spouse's or civil partner's) imprisonment or internment by the Japanese during the Second World War.

-Payments made by a local authority under the Adoption and Children Act 2002.

-Value of any ex gratia payments from the Skipton Fund made by the Secretary of State for Health to people infected with Hepatitis C as a result of NHS treatment with blood or blood products.

-Payments made under a trust established out of funds provided by the Secretary of State for Health for persons suffering from variant Creutzfeldt-Jakob disease to the victim or their partner (at the time of victim's death).

-From 9 July 2018, payments made under or by a trust established for the purpose of giving relief and assistance to disabled people whose disabilities were caused by the fact that during their pregnancy their mother had taken Thalidomide.

-Any payments under sections 2, 3 or 7 of the Age-Related Payments Act 2004 or Age-Related Payments Regulations 2005 (SI 2005/ 1983).

-Payments made under section 63(6)(b) of the Health Services and Public Health Act 1968 to a person to meet childcare costs where he is undertaking instruction connected with the health service because of arrangements made under section 63(6)(b).

-Payments of income or capital made under section 14F of the Children Act 1989 to a resident who is a prospective special guardian or special guardian.

​Qualifying relative

Any of the following are deemed to be a qualifying relative under the disregarded capital regulations:
-Parent (including an adoptive parent).

-Parent-in-law, son-in-law and daughter-in-law.

-Son and daughter (including an adopted son or daughter).

-Step-parent, step-son and step-daughter.

-Brother and sister.

-Grandparent and grandchild.

-Uncle and aunt.

-Nephew and niece.

-Spouse, civil partner or unmarried partner of any of the above categories of qualifying relative.

Town & Country Law uses, and advises, Clients in relation to Deliberate Deprivation of Assets by specific reference to the AgeUK Factsheet, 'Factsheet 40', which has a good analysis of the legislation, case law and its application in England & Wales.

That document can be found here.

That guidance, in brief, is as follows:

When considering estate planning in later life, it is definitely advisable for individuals to consider how their actions, or the actions of those who advise them, will effect them.

Part of that is considering how the rules in relation to 'Deliberate Deprivation of Assets' interplay with those actions.

These rules cover the scenario whereby an individual deliberately gets rid of assets to prevent a local authority using them to pay for their (usually residential) care in the future.

Considering the rules on Deliberate Deprivation is not, of course, always necessary. As a general rule, if you intend to give away property or assets (cash, investments, house etcetera) in your lifetime, you should consider the rules in relation to Deliberate Deprivation of Assets and indeed whether you will fall foul of them.

First the warning: if you do fall foul of them, and need long term residential care in the future, you can be treated as if you never disposed of that asset for means assessment purposes, and the person or people who now hold the asset made to pay for your care up to the value they received.

Responsible planning is therefore key.

We can reduce down the guidance in relation to Deliberate Deprivation of Assets as follows:

If at the time you dispose of an asset (for example, putting a house in to a Trust) you were fit and healthy, and had no reason to believe that you would need care in the future, then you cannot be said to have deliberately deprived a local authority of those assets to pay for your care.

There is one further point. The disposal (for example, putting a house in to a Trust) cannot have been done, regardless of the above, with the sole (or particularly significant) intention of depriving a local authority.

So, if you undertake estate planning for genuine and responsible reasons, at the right time, that meets your requirements, that is of course fine.

Want to plan your estate for care fees? Use our Will Trust!