Selling Home To Fund Moving To A Care Home.

[dave50]

As I understand it, if an elderly person was to gift their house to their children but then needed to move into a care home within 7 years, the house can be used as an asset and be forcibly sold to pay for care. What would happen if the house had been sold by the children and all the cash from the sale spent and they had nothing left?

[bednobs]

they would owe it as a debt, and be paying it off all their lives??

[woofgang]

that's not exactly right. The house is not forcibly sold and it can be longer than 7 years ago. What does happen is that the persons assets are calculated as though they still had the house or whatever has been given away. If the house had been sold, where would the person who needs res care have been living?

https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs40_deprivation_of_assets_in_social_care_fcs.pdf

[bednobs]

but woof what ACTUALLY happens? If the person is calculated to have to pay towards their care because they calculate on the assumption they still have the asset. but they can't pay becuase they dont - what would happen?

[woofgang]

Well where possible, the person would have to return to where they had been living. I think it would depend upon the circumstances. I haven't worked in the NHS for some time but I did see some nasty situations where Mum (it usually was Mum) had moved in with the kids and put the cash from her house into their house and then after a hospital stay suddenly the family "couldn't cope" I think (although I never saw it come to it) that where there was any suggestion of of a mental competency issue, then the receivers of the gift could have legal action taken against them.....but as I said, in practice highly unlikely because the peron in hospital must have been living somewhere....so either they have got assets to pay rent with or they have a "home address" even if they don't own it. If they had put money into where they live, then its arguable that they have equity in that even if the money was intended as a gift and it may therefore be possible to put a lien on that property to recover that equity when its sold. I don't know about the legality of it. I do know that councils, as stewards of public money, do have a duty to recover such expenditure where they can and even more so as public funding gets tighter.

[Buenchico]

Woofgang's link has largely answered the question.

However it's worth noting that the 'seven year rule', which is used when calculating Inheritance Tax, does NOT apply to 'deprivation of assets in social care'. There is NO TIME LIMIT upon how far back a local authority can go when seeking to recover funds which were lost through someone seeking to reduce their assets in order that the value of their home should not be used to pay for their care.

[ladybirder]

Good.

[jennyjoan]

A lady I know who was in care home, her son sold HIS house and moved into her house. Was in the care home facility for about 3 years and has since died. Absolutely no way the authorities will get their money now.

[Bazile]

Didn't the tory gov make a pledge that people's homes would not be taken to pay for care ?

[woofgang]

Bazile. people's homes aren't "taken" to pay for care.

[woofgang]

You don't know what the arrangement was or about her other assets? Also it may be that Ireland has different arrangements?

[tamborine]

https://www.ftadviser.com/pensions/2019/12/19/queen-s-speech-govt-to-tackle-social-care-with-3-point-plan/


The Queen said: "They [the government] will ensure that the social care system provides everyone with the dignity and security they deserve and that no-one who needs care has to sell their home to pay for it."

[woofgang]

you see I am not isure about that....its the "children deserve an inheritance" argument which I do not agree with.

[woofgang]

oh and people don't have to sell their homes now (but what will they do with it if they don't live there?) an agreement can be made to place a lien on the house and the amount is repayed when the person dies and the house is sold....like equity release.

[tamborine]

woofgang, I presume heirs or nik inherit running costs ie council tax etc that is deducted from inheritance

[tamborine]

nik = next of kin. Am paying for ill son's flat till its rented, while son receives medic treatment in care home.

[woofgang]

Its my understanding that legitimate expenses are deducted before asset calculation....hang on

[woofgang]

no tambo, I had a look but can't find the information.

[tamborine]

https://www.nidirect.gov.uk/articles/inheriting-private-property#toc-1

see tax & debts on property inheritance

[bednobs]

but your son is not deceased?

[woofgang]

tambo, in answer to your question (if I have understood it) you are entitled to receive back out of eventual rental costs, the cost of anything you have paid for on your son's behalf. I think when his income and assets are calculated, they are calculated net of legitimate expenses. I do know that if the person needing care owns a business then its the net profit that is taken into account and not the gross.