Residential Care

Capital can be distinguished from income because a capital payment is made without being tied to a period and is not intended to form part of a series of payments.

Capital includes:

• Your home and any land or property owned by you (although see below for circumstances when this is ignored)
• Savings count as capital. This includes money in a bank or building society, cash at home, shares and unit trusts. If the person going into care has a joint account with another person, the care home resident's share will be considered. Please note this is not automatically considered by the Trust as 50/50.
• Fixed term investments are taken into account unless the money is unobtainable. An investment which can be realized before the end of a term, albeit with a loss of interest, is taken into account (which includes a TESSA/ISA account)
• Money or other assets held on trust are taken into account in certain circumstances.

What are the capital financial limits?

In order to receive assistance from social services with care fees, you must not have capital in excess of specified limits. The current capital limits are as follows:

• Capital of £14,250 or less is ignored. This means that you are not expected to use any of this money to fund your care.
• If you have capital of between £14,250.01 and £23,250 will have an assumed income from the capital. Each £250 or part thereof between £14,250.01 and £23,250 is assumed to generate an income of £1 per week. The assumed income is then taken into account in the assessment of income.
• If you in or about to enter residential care and have capital of over £23,250, you are expected to fund the full cost of your care from your own resources.

When is the value of your home ignored?

The value of the home is ignored if any of the following still lives there:

• Your partner, former partner or civil partner (unless you are estranged from them)
• A lone parent who is your estranged or divorced partner 
• A relative or member of their family who is aged 60 or over or is incapacitated
• A relative or a member of the relative's family who is a child under sixteen that you are liable to maintain

The Trust also has a general discretion to ignore the value of the premises occupied by any third party where this would be reasonable in the circumstances. It is important therefore to provide reasons why the home should be disregarded and to ask the trust to exercise its discretion on this basis.

When is other capital ignored?

In certain circumstances, other capital can be ignored. These include:

• Tax rebates
• Arrears of a number of social security benefits (ignored for up to one year)
• The surrender value of life assurance policy
• Endowment policies or annuities
• Personal possessions such as your jewellery
• The £10,000 ex-gratia payment for Far Eastern prisoners of war

However, where personal possessions are purchased in order to enable you to claim or increase your entitlement to assistance with care fees, the value of these are taken into account.

An interest in property which a person will or may possess in the future, but does not possess at the time of assessment, is generally ignored as capital. However, this does not apply where the future interest is in land or premises for which a person has been granted a lease, tenancy, sub-lease or sub-tenancy.

How is capital calculated?

The value of capital is based on its current market value or surrender value. From this is deducted 10% for expenses attributable to sale and also the amount of any charge secured on the asset such as an outstanding mortgage.

If you and another person have an interest in a capital asset other than land, each of you will be deemed to have an equal share of the asset until such times as the asset is sold and you are given your share.

Where the asset is land which is jointly owned, the value of your share is the price your interest would realise if sold to a willing buyer, minus 10% and the amount of any charge secured solely on your share. The resulting value could easily be minimal, as there may be few willing buyers for a part share in a house.

Can I not just dispose of capital?

No, as you may be treated as possessing “notional capital”.

Assets deliberately and purposively disposed of can be added back by the local authority on a notional basis when they are completing your financial assessment.

The key question for Trusts to consider is motive: what has been the reason behind your decision to get rid of an asset? Pragmatically, the earlier you transfer or dispose of the capital, the lower the risk that it will be treated as notional capital.

Nonetheless, the legal test is one of purpose of transferring property or other assets and not timing. There is no time limit as to how far back a Trust can go to find out if you have given away assets to avoid paying care home costs. However, the onus is on the Trust to prove that you have deliberately transferred the asset for this reason.

Can I keep my home and assets when I move into a care home?

There are some ways in which you may be able to keep their home or assets when you move into a care home. This is particularly important if you hope to recover and wish to move back home. However, it is important to point out that it is illegal to transfer ownership of an asset to avoid paying care home fees.

Please speak to an adviser, for example Age NI, or to a financial adviser before deciding how to pay care home fees.

Deferred Payment Agreements

It is very important to note that these agreements apply to England mainly and rarely happen in Northern Ireland but you could approach a Trust and ask if such an agreement could be put in place.

You may be able to make a deferred payment agreement with you local Trust if you are assessed as paying the full fees for the care home due to your home being counted as capital. This allows homeowners to avoid selling their home.

However, deferred payment agreements are at the discretion of the Trust. Under such an agreement, you can pay the contribution that would be expected of you if your home was not taken into consideration for capital purposes. The Trust then keeps a record of the remaining amount that is owed and this becomes payable when you die or earlier if you so choose. The money owed can be collected from the proceeds of the sale of the house or from the person who inherits the property.

Significantly, interest is not charged on this whilst you are alive and in residential care. When you do pass away, interest is charged to the estate at market rates 56 days after death.

Can I not rent out my home instead?

Rather than selling your home you could consider renting it out to tenants and using the income from the rent to pay for your care home fees. It is possible for you to rent your home without having to take on the burden of doing so, for example by using a letting agent.

For further information about renting property see NI Direct.

What if it takes time to sell my property?

If you have your house on the market but it has not yet sold, it is at the discretion of the Trust whether or not they agree to wait on the payment. In England there is legislation that enables you to move into a care home and not pay the money owing until the house is sold. However, you would also have to pay interest payments on the money owing.

In Northern Ireland no such legislation exists, so you would have to ask your local Trust first. If you decide to sell your home to cover the cost of your care home fees, you should seek advice about selling your house.

For further information visit NI Direct.

Can I not transfer my assets?

It is important to point out that there are many other ways you could be affected by a transfer of assets, as well as legal implications of avoiding care home fees. Once you have passed on your assets to your children or other family members, you have no legal rights if things change in the future. Although you may feel protected, it is not safe to assume that you will have access to your assets once it is signed over to somebody else.

For example, the person to whom you have signed over your assets may be declared bankrupt, get divorced, secure the property against a loan which they fail to pay, or even die, which can all influence what happens to the asset.

Once it has been established that you are not disqualified from assistance by virtue of the amount of capital you have, the Trust will consider your income. In order to do this, the Trust will work out what the cost of the accommodation will be and what your income is.

How is my income calculated?

Income is worked out by calculating the amount of money you have coming in each week, including income from savings, pension (State, occupational or personal pension) and state benefits.

The capital and income rules which Trusts must follow in conducting a financial assessment for you when you enter residential care are similar to those applied in determining entitlement to Pension Credit (PC) or Income Support. Nevertheless, there are some significant differences.

You should ensure that you are getting all the benefits you are entitled to before a financial assessment takes place, as the amount you pay towards your fees will be based on all income, including benefits. The Trust will take into account almost all income except your personal expenses allowance (PEA) of £27.19.

Attendance Allowance and Disability Living Allowance/Personal Independence Payment

There are, however, two important exceptions: Attendance Allowance (AA) and Disability Living Allowance (DLA) care component or Personal Independence Payment (PIP) daily living component.

These benefits are payable for only four weeks when you enter residential accommodation on a permanent basis and are not fully self-funding. Although these benefits are ignored for the purposes of Pension Credit and Income Support calculations, they are taken into account when assessing entitlement to social services assistance unless you are only entering care on a temporary basis. In this case, Attendance Allowance, DLA (care component), PIP (daily living component) is disregarded.

If you get the mobility component of DLA or PIP, you will be able to keep getting this in a care home. If you receive Savings Credit, you will be able to keep up to £5.75 per week of it (£8.60 if a couple) which will be added to your personal expenses allowance.

The Trust must arrange to provide care in your preferred accommodation, provided the accommodation:

• Is available and suitable to your needs
• Does not cost more than the trust would usually expect to pay for care for someone with such needs

If you are unable to make a choice because of ill health, then the wishes of your carer should be taken into account.

Guidance sets out that the cost test is not whether a cheaper option is available but what a Trust would normally pay to meet a person's needs by the provision of residential care.

What if my preferred accommodation costs more?

If you choose a more expensive option, the placement may be arranged by the Trust provided a third party (for example, a family member, friend or charity) is prepared to meet the difference. In such cases, the Trust will normally pay the full charge and recover the extra cost from the third party.

Third party top-ups should only be happening where the third party has agreed to pay the additional amount in order that you can enter a particular home which is more expensive than the Trust considers reasonable. If the Trust has placed an unreasonable restriction on the amount which it considered reasonable or if your needs can only be met by being placed in a particular home, a request for a third party top-up payment may be improper. Therefore, the Trust could be open to legal challenge.

In these circumstances, legal advice should be sought as soon as possible.

What if my preferred accommodation is in a different area?

You may wish to move to a new home in a different Trust area to be near to relatives or friends.

If you have been assessed as needing care and your Trust has agreed to pay for this care, then the Trust is responsible for your fees even if you choose a home in a different area. However, as explained above, if the home is more expensive than what the Trust expects to pay, a third-party top-up may be required.

Under certain circumstances the local Trust may be able to pay the care home fees if they are more expensive. Please contact them for further details.

Moving out of Northern Ireland

If you want to move outside of Northern Ireland to Great Britain, the payment responsibilities are more complicated.

If you are assessed as needing respite care, you will have to make a contribution towards the cost but your local Trust may help you pay for it.

If your stay is under 8 weeks’ duration

For respire care of a period of up to 8 weeks the Trust is not obliged to do a full means test and should just charge a ‘reasonable’ amount.

If your stay is over 8 week’s duration

After 8 weeks the means test must be applied. If the Trust does make a full means test, the value of your home cannot be counted as capital. Liabilities that you still have to pay for, such as utilities, house insurance and rates, must also be taken into account. Benefits received towards housing costs, such as Housing Benefit, and any Attendance Allowance or Disability Living Allowance received, should be ignored.

If you are paying for the full cost of your care, it is a good idea to approach several homes as fees may vary greatly.

Direct Payments

If you receive direct payments and the Trust agrees that you need a temporary stay in a home (usually 4 weeks or less), they may be able to use your direct payments to pay for it. However, direct payments are not intended to fund long stays or permanent residential care.