Care home funding and property transfers – don’t get caught out

Contrary to popular belief, transferring your property to a relative will not always avoid the need to pay for care and may, in some circumstances, result in a situation where you pay for care unnecessarily.

We have seen an increase in disputes with local councils over recent months in relation to care funding where properties, which would be ignored from a care funding assessment, have been transferred to relatives with significant consequences.

Statutory Guidance

The Statutory Guidance for care funding assessments provides detailed rules for assessing assets, including property, when someone has a need for care and support.

The guidance provides automatic disregards for property in certain circumstances, including (but not limited to):

• Where the individual is receiving care in their own home
• Where the person’s stay in care is temporary and they intend to return to the property
• Where the property is occupied by:
  • A spouse or civil partner
  • A relative aged 60 or over
  • A child under the age of 18
  • An incapacitated relative

There is also a wider discretion of the local authority to apply a disregard in other circumstances.

This means that, when looking at how much you pay for care, the value of your property is usually ignored. However, those disregards may be seemingly undone by premature property transfers to other relatives.

With the economic effects of Brexit and Covid starting to bite, local authorities are taking a strict approach to financial assessments to ensure that individuals in care are not maintained at public expense unnecessarily.

This has resulted in harsh rulings which are costly and stressful to undo. We are seeing an increase in local authorities ruling that properties which are transferred to relatives be counted for financial assessments as if the individual in care did not transfer them. This approach is being applied where the property would have been ignored, if it had remained in the individual’s own name.

Example one

Mr & Mrs White transferred their property to their grandson in 1995. 25 years later, Mr White enters residential care. His property should be ignored for care funding as his wife lives in the property. However, because it was transferred out of his name, the council have suggested this was done to deliberately deprive himself of assets and he is charged the full cost of his care as if he still owns the property. This is despite the reasons for the transfer or the fact that this was some 25 years before a care need was present.

Example two

Mark has lived with his mother, Judith, for the past 25 years. Judith is widowed and owns the property entirely. In 2014, Judith transferred the property to Mark to avoid an inheritance dispute and to recognise his support for her over the years. In 2020, Judith suffers a stroke and requires residential care and support. Mark is 62 at the time Judith enters care. The property ought to be disregarded as a relative over 60 lives there however, the council note that the property is no longer in Judith’s name and they determine that Judith has deliberately deprived herself to avoid paying for care. The council treat Judith as if she still has the property and she is required to pay in full for her care.

Whilst we do not agree with this interpretation of the rules (and indeed, we have successfully overturned such rulings on behalf of our clients), the fact remains that those decisions need to be challenged and it inevitably takes time and an experienced solicitor to negotiate and put things right. In some cases, the Local Government Ombudsmans is also approached to investigate and this can be a time-consuming process.

Whatever your intentions with your property, it is important that you seek appropriate advice at an early stage to avoid falling into difficulties later on.