Care Home Funding Guide: Protecting Your Home and Assets as a Spouse

When a partner requires care home support, spouses often face overwhelming concerns about their financial security and the fate of their shared home. This comprehensive guide will help you understand your rights, explore the protections available to you, and make informed decisions about care funding while safeguarding your future, particularly when managing legal affairs for someone with dementia.

Will I Lose My Home When My Spouse Enters a Care Home?

The immediate answer that many spouses need to hear is no - if you continue living in your shared home, it cannot be included in the financial assessment for care. This protection is firmly established in UK care funding legislation and applies regardless of whether you own or rent your home.

The law specifically protects properties where a spouse or partner or qualifying relative continues to live there. This includes:

Spouses and those in a civil partnership
Unmarried couples living together as married
Former partners
Relatives aged 60 or over (including a son or daughter)
Relatives under 18
Incapacitated relatives receiving disability benefits

This protection applies regardless of:

The length of time you've lived in the property
Whether your name appears on the property deeds
The value of your home
Your own financial circumstances
The type of care your spouse requires

Understanding the Financial Assessment Process and Protecting Your Assets

When your spouse needs care home support, your local authority may conduct a means test to determine how their care will be funded. Understanding how to protect your assets during this process is crucial, particularly for people living with dementia who may face additional challenges.

Initial Assessment Steps

The financial assessment typically follows these stages:

Initial contact with social care services or care needs assessment
Meeting with a financial assessor
Providing documentation of all assets and income
Detailed review of joint assets and their division
Assessment of pension arrangements
Calculation of potential care contributions

The local authority must provide you with a clear breakdown of their assessment and how they reached their decisions. You have the right to challenge any conclusions you believe are incorrect.

How Joint Assets Are Assessed

For couples, the local authority can only consider the assets that belong to the person with dementia or other health condition requiring care. Joint assets are typically split equally, though this can be adjusted if you can prove a different ownership arrangement. Here's how different assets are treated:

Joint Bank Accounts:

Usually divided equally between partners
Previous spending patterns may be considered
Regular income payments are assessed separately
Joint accounts and pensions may need to be separated for clarity

Property and Land:

Main home is protected while occupied by spouse
Holiday homes or investment properties are included
Rental income is considered as part of regular income
Property improvements or maintenance costs may be deductible

Savings and Investments:

ISAs and savings accounts are usually split equally
Stocks and shares are valued at current market rates
Premium bonds and other investments are included
Life insurance policies are typically disregarded

Current Financial Thresholds (2024/25)

Understanding the thresholds is crucial for financial planning:

In England:

Upper threshold: £23,250
Lower threshold: £14,250
Between thresholds: Contributory charging applies
Below lower threshold: Only income is considered

These thresholds determine how much your spouse might need to contribute towards their care home fees. Assets above the upper threshold mean self-funding is required, while those between thresholds will contribute on a sliding scale.

Essential Legal Documents: Power of Attorney and Mental Capacity

One of the most important steps in protecting both your assets and ensuring proper affairs for someone with dementia are managed is establishing a lasting power of attorney (LPA). This legal document allows you to make decisions on behalf of someone who may lose mental capacity due to dementia or other conditions.

What is a Lasting Power of Attorney?

A lasting power of attorney is a crucial legal tool that enables a trusted person to act on your behalf when you're unable to make decisions yourself. There are two types of LPA:

Property and Financial Affairs LPA:

Manages financial affairs including bank accounts, bills, and property
Can be used as soon as it's registered, even if you still have capacity
Allows your attorney to handle financial decisions and pay for care costs
Covers property and financial matters comprehensively

Health and Welfare LPA:

A health and welfare LPA covers medical treatment and care decisions
Can only be used once you've lost mental capacity
Includes medical decisions about treatment and where you live
Works alongside the welfare LPA to protect your best interests

Why You Need to Make an LPA

If you're diagnosed with dementia, setting up LPAs becomes increasingly urgent. Without an LPA, if you lose mental capacity, your family will need to apply to the Court of Protection for a deputyship order: a process that's more expensive, time-consuming, and stressful than creating an LPA. An application made to the Court can take many months and cost significantly more than arranging an LPA in advance.

How to Set Up an LPA

To make an LPA, you should:

Consider who you trust to manage your affairs, often a spouse or partner, adult child, or son or daughter
Consult a solicitor experienced in later-life planning to ensure the LPA is properly structured
Complete the LPA forms while you still have mental capacity
Ensure the LPA documents need to be registered with the Office of the Public Guardian before they can be used
Keep copies safe and inform relevant parties

The solicitor will need to verify your identity and ensure you understand what you're signing. It is important to get this done early but once someone has lost capacity, it's too late to create an LPA.

The Registration Process

Your LPA documents need to register and be registered with the Office of the Public Guardian before they can be used. This process takes approximately 8-10 weeks, so it's essential not to delay. The Office of the Public Guardian oversees all LPAs and deputyships to protect vulnerable people.

Protecting Your Income

One of the most crucial aspects of care funding is ensuring the spouse remaining at home maintains adequate income for their own needs. The system includes several vital protections to prevent financial hardship.

Minimum Income Guarantee

The law requires local authorities to ensure you retain enough income to maintain your independence and wellbeing. This protection, known as the Minimum Income Guarantee (MIG), varies based on:

Your age
Whether you receive disability benefits
Your household composition
Any special circumstances or needs

The MIG is regularly reviewed and updated to reflect living costs. It's typically higher than basic pension levels to ensure you can maintain your quality of life.

Treatment of Different Income Types

Different types of income are treated distinctly in the assessment:

Personal Income:

Your own State Pension remains entirely yours
Personal occupational pensions stay separate
Employment income is protected
Your benefits remain unaffected

Joint Income:

Joint benefits are typically divided equally
Shared rental income may be split
Investment returns from joint assets are divided
Regular payments from joint sources are assessed fairly

The local authority must ensure any income division doesn't leave you in financial difficulty. They should consider your:

Essential living costs
Housing-related expenses
Healthcare needs
Social and leisure activities
Transport costs
Any debt obligations

Legal Protections and Property Rights

Understanding and securing your legal position is crucial when arranging care for your spouse. The legal framework surrounding care funding is designed to protect both partners while ensuring appropriate care provision.

Property Ownership Considerations

The way your property is owned can significantly impact future planning options. There are two main types of property ownership for couples:

Joint Tenancy is the most common arrangement for married couples, where both partners own the entire property. This means:

The property automatically passes to the surviving spouse
Neither owner can dispose of their 'share' in a will
Both partners have equal rights to the property
Any decisions on your behalf about the property must be made jointly

Tenants in Common means each partner owns a defined share of the property. This arrangement:

Allows each owner to leave their share to someone else in their will (relevant for probate planning)
Can be split in any proportion (not necessarily 50/50)
Offers more flexibility for inheritance planning
May provide additional options for care funding planning

Understanding your current ownership arrangement is vital, so check your property deeds or contact the Land Registry for clarification. Making changes to property ownership specifically to avoid care fees could be challenged as deprivation of assets.

Understanding Deprivation of Assets

Deprivation of assets is a serious concern when planning for care. This occurs when someone deliberately reduces their assets held to avoid paying care costs or reduce the amount they pay for their care. Local authorities have the power to treat you as still owning assets if they believe you've given away money or property to avoid care fees.

Examples of potential deprivation include:

Transferring your home into someone else's name shortly before needing care
Giving away large sums of money to family members
Selling assets to avoid care fees below market value
Making unusual or excessive gifts

The timing and motivation matter significantly. If you transferred assets held in joint names many years before needing care for legitimate reasons, this is unlikely to be challenged. However, transferring assets after a diagnosis of dementia or when care needs are foreseeable may be investigated.

Future Planning and Asset Protection Strategies

While immediate protections exist for spouses, planning for the future requires careful consideration of various options and their implications.

Life Interest Trusts

A life interest trust is an estate planning tool that can help protect assets for future generations while allowing a surviving spouse to benefit during their lifetime. Under the terms of the trust, the surviving partner has the right to live in the property or receive income from trust assets for life, but the capital is protected for named beneficiaries (often children).

Key features of a life interest trust:

The surviving spouse retains the right to live in the property
The property doesn't form part of the surviving spouse's estate
Can offer some protection if the surviving spouse later needs care
Must be set up correctly through a will with professional legal advice
The terms of the trust must be carefully drafted to be effective

It's crucial to understand that a life interest trust must be established well before care is needed and for legitimate inheritance planning reasons, not solely to avoid care costs.

Legitimate Asset Protection Strategies

Several legitimate approaches can help protect assets while ensuring fair care funding:

Care Fee Annuities:

Provide guaranteed income for life to cover care costs
Offer certainty about future financial commitments
Can protect remaining assets once purchased
May provide inheritance tax benefits
Should be considered alongside professional financial advice

Trust Arrangements:

Must be established well before care is needed
Various types available depending on circumstances
Can help protect assets for future generations
Require careful legal structuring
Should not be created solely to avoid care fees

Investment Planning:

Careful structuring of investments for accessibility
Balance between growth and income needs
Consideration of tax implications
Regular review and adjustment of arrangements
Professional advice is essential

Special Considerations for People Living with Dementia

When managing legal affairs for someone with dementia, there are additional considerations that families should understand.

Acting in Someone's Best Interests

Whether you're using an LPA or have been appointed by the Court of Protection to become a deputy, you must always act in the best interests of the person with dementia. This means:

Involving them in decisions as much as possible
Considering their past and present wishes
Consulting with family members and carers
Choosing the least restrictive option
Keeping detailed records of decisions on your behalf of the person

Making an Advance Decision

Alongside an LPA, someone may wish to make an advance decision (sometimes called a living will). This allows a person to refuse specific medical treatments in advance, in case they later lack capacity to consent to or refuse those treatments. This only applies to refusing treatment, not requesting it.

Day-to-Day Financial Management

For people living with dementia, practical support with daily financial affairs becomes increasingly important:

Setting up direct debits for regular bills
Simplifying banking arrangements
Ensuring someone can access funds to pay for their care
Regular monitoring to prevent financial abuse
Clear records of all transactions

Additional Financial Support Options

Beyond standard care funding arrangements, several additional sources of support may be available to help manage care costs and protect your financial security.

NHS Continuing Healthcare

This funding stream can cover all care home fees if your spouse's primary need is health-related. Assessment considers:

Complexity of health needs
Intensity of required care
Unpredictability of condition
Evidence from healthcare professionals
Regular reviews of eligibility

The assessment process is thorough and can be complex, but securing NHS Continuing Healthcare can make a significant difference to your financial situation. It's worth seeking specialist advice if you believe your spouse might qualify.

Benefits and Allowances

Several benefits can help with care fees and living expenses:

Attendance Allowance:

Non-means-tested benefit for over-65s
Two rates depending on care needs
Can be claimed regardless of savings
Doesn't affect other benefits
Can be used flexibly for any purpose, including helping to pay for care

Pension Credit:

Tops up weekly income for eligible pensioners
Can unlock access to other benefits
Regular reviews of eligibility
Additional amounts for carers or severe disability

Council Tax Reductions:

Single person discount when one partner moves to care
Potential further reductions based on income
Local authority discretionary support
Regular reviews of eligibility

Getting Professional Advice

The complexity of care funding arrangements means professional advice is often invaluable. Different professionals can help with specific aspects of planning:

Financial Advisers:

Look for specialists in later-life financial planning
Check for Society of Later Life Advisers (SOLLA) accreditation
Discuss fees and services upfront
Regular reviews of arrangements
Coordination with other professionals

Legal Professionals:

A solicitor with expertise in elderly care law can provide invaluable guidance
Property and estate planning knowledge
Power of attorney arrangements and registration
Asset protection advice that's compliant with deprivation of assets rules
Regular updates on legal changes
Guidance on probate and inheritance matters

Social Workers and Care Navigators:

Understanding of local authority processes and social care systems
Advocacy in assessments
Knowledge of available services
Regular care reviews
Support with transitions

When working with a solicitor, be prepared to discuss your full financial situation, family circumstances, and long-term wishes. The solicitor can help ensure all legal documents are properly prepared and need to be registered where required.

Supporting Your Journey at Ashberry Care Homes

At Ashberry Care Homes, we understand that navigating care funding decisions can feel overwhelming, particularly when living with dementia affects your family. Our experienced team is here to support you through every step of the process, offering:

Clear, practical guidance on funding options
Support with paperwork and assessments
Connections to trusted professional advisers including solicitor referrals
Regular reviews of care arrangements
Transparent fee structures and payment plans
Specialist dementia care support

We believe in building partnerships with residents and their families, ensuring care arrangements are both appropriate and sustainable. Our homes provide not just excellent care, but peace of mind for the whole family.

For expert guidance on care funding and to discover how we can support your family's journey, contact our friendly team today. We're here to help you make informed decisions about your future care arrangements while protecting your financial security.

Key Takeaways

Your home is protected if you continue living there while your spouse or partner is in care
Set up a lasting power of attorney before you lose mental capacity—both an LPA for finances and a health and welfare one
LPAs need to be registered with the Office of the Public Guardian before use
Deprivation of assets rules prevent deliberate gifting to avoid care fees
A life interest trust may offer protection but must be set up for legitimate reasons
Consult a solicitor experienced in care law for personalised advice
The Court of Protection can appoint a deputy if no LPA exists, but this is costlier
People living with dementia need early legal planning while they retain mental capacity

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