insideKENT Magazine Issue 36 - March 2015 | Page 152

ADVERTISEMENT FEATURE CAN WE BE SURE WE CAN LEAVE THE HOUSE TO THE CHILDREN? Care funding under the new law – your essential myth buster You know it, I know it – the present system for funding care in later life is broken. Successive governments have known this too, which is why, after much deliberation, the Dilnot Commission proposed a new regime which promised to cap the amount that people would have to pay towards care costs. The Chancellor also boasted that the reforms would ‘end the scandal of people being forced to sell their houses during their lifetime’. The government packaged up the proposals in the Care Bill. Now that Bill has become law, its provisions will come into force by April 2016. How much will change? Are we really going to stroll into the sunlit uplands of fair and affordable care for all? Can we be sure we can leave the house to the children? For answers to these pressing questions, read the myth busters below. “There will be a limit on the amount I have to pay for my care.” There is already a limit today – but it’s miserly, and beyond it, the system offers no cap on what you might have to pay for your social care. The new law will require the Local Authority (LA) to contribute to the cost of your care at an earlier stage than at present, and will introduce a cap on the amount you have to pay for the cost of your social care, but only if your care needs are sufficiently high. If your savings and your property (unless it is disregarded) are worth more than £118,000, you will pay for all your care. However, if your care needs are judged to be substantial enough, once the running total of your social care costs has reached £72,000 (the ‘care cap’), your LA will take over payment of that element of your care. But you will continue to pay the ‘hotel costs’ until your capital drops below the £118,000 limit. Then the LA will help towards these costs. When your capital drops to £17,000, you will not be expected to use any more of it, but in most cases, you will continue to pay over most of your income. “So, will the LA take over the cost of my social care once I have spent £72,000 on it?” No – it will only do so if your care needs are high enough and if the LA itself would have spent £72,000 on meeting those needs. What you pay while you are in care is irrelevant. And if your care needs do not meet the government criteria (which is likely to apply only to those with ‘substantial’ needs) then there is no limit on the cost of care – until of course, your assets fall to £17,000 in value. Therefore, if you only have low or moderate needs for care, the new care cap is not likely to be of any help to you. “But I won’t have to sell my house to pay for care now?” This much-trumpeted aspect of the new law applies from April 2015. Initially, it seemed to offer salvation to those who lived on their own and then go into care. But there is one vital element that must be understood: the change does not guarantee to ‘save the house for the children’. If your savings are less than £23,250, it just requires the LA to lend you money for care against the security of your home. But when you die, your home will usually have to be sold to repay the loan. So all it really does is delay the time when your home is sold to cover the cost of care, if you need to resort to this capital. T oday, the LA has a choice about whether to lend you money against your home – under the new regime they will be required to make the loan. However, it is likely that the LA will charge interest at around 4%, whereas today they cannot. 152 These elements of the new Act are out for consultation in the autumn, so expect more debate on the detail then. Don’t forget however that just as today, you will not have to sell your home if your spouse or partner (or another relative who is over 60 or is disabled) is still living there. In these circumstances, the LA must disregard the value of the home altogether. Likewise, those who have complex and substantial health needs requiring on-going care will receive free NHS Continuing Care. Jill MacMahon is a solicitor specialising in wills, trusts and inheritance tax planning. Contact Jill for further information: [email protected] 0208 290 0440 www.thackraywilliams.com