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Paying for care – what happens to my home?

Published: 01 June 2021
Time to read: 5 mins

Taking the decision to move out of your home into residential or nursing care can be confusing and overwhelming for those involved, particularly where there is a diagnosis of Dementia. While it is wise to seek guidance related to your specific situation and needs, in our experience many people are particularly concerned about what will happen to their home.

  1. Paying for residential care

Where you have capital of more than £28,750 you will be required to pay for your care in Scotland.  Where you have capital below £18,000 the local authority will pay for all of your care and where you have capital between £18,000 and £28,750 payment will be divided between you and the local authority.

Irrespective of your capital, the Scottish Government make a contribution of £193.50 per week for personal care with an additional £87.10per week should you require nursing care.

Capital includes all your savings and investments but will not include the value of any life assurance which you hold.  It will also include the value of any property you own over and above your home and other assets which have a capital value. Whether the value of your home is included in calculating your capital will depend upon whether it is to be disregarded.

  1. Will my home be disregarded?

The value of your home will be disregarded in calculating your capital for the first 12 weeks following your move to residential care.  It will also be disregarded where:

  • you are part of a couple and your spouse, partner or civil partner continues to live in your home;
  • your estranged spouse, partner or civil partner continues to live in the house and is a lone parent;
  • the house is occupied by a family member who is over 60, incapacitated or is a child under 16 whom you are obliged to maintain.

In addition to these compulsory reasons to disregard your home, the local authority have discretion to disregard your home.  This can be helpful for example an adult child has moved into your home to care for you.

  1. Will the local authority force my family to sell my home?

Where you are required to contribute to your care, the local authority is concerned that your contribution is paid. Here is an example of how you might pay for your care:

Your income Amount (per month)
State Pension £536
Employment Pension £3,000
Investment Income £500
Scottish Government Personal Care Allowance £774
TOTAL £4810
Cost of care @ £1,200 per week £4,800
Shortfall (paid from savings) £10.00

Where you have sufficient income and savings to pay for your care then the local authority will not force your family to sell your home. On the other hand, where you do not have sufficient income and savings to pay for your care, then you may have to think about selling your home.

  1. Are there alternatives to selling my home?

The local authority do not have power to force you or your family to sell your home.  However, where you do not pay for your care the local authority has power to place a debt upon your house to meet your care fees, this is known as a “Charging Order”.

A Charging Order attaches to your house which means that the house cannot be sold without repayment of the amount due under the Charging Order to the local authority. In this arrangement the local authority will pay for your care however, they will add the amount they have paid for your care to the Charging Order. Therefore, when the house is eventually sold or transferred the amount due under the Charging Order will be all of your care costs and this must be repaid to the local authority.

An alternative and less widely used arrangement is a “Deferred Payment Agreement” in which you or your attorney agrees with the local authority that the local authority will pay for your care and the debt will be repaid following your death. This operates in a similar way to a Charging Order however, it is set out in a formal agreement.

  1. Can I protect my home?

We understand that care cost planning is a concern for many people. With thorough preparation, we can assist people in safeguarding your assets for your ultimate beneficiaries, such as your children. If you are considering moving any assets or altering your estate to support the cost of your care, please seek professional advice before doing so.

Our private client teams in Edinburgh, Glasgow and Perth are experts in private client and planning for elderly care, and they understand that it can be a challenging and emotional process. They are here to provide thoughtful advice and help you navigate the challenges and explore all options, to ensure peace of mind for you and your loved ones.

If you would like more information about any of the issues raised above, please get in touch.

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