Care Home Fees: 12 Week Disregard

Often, when I am discussing writing a Will or matters relating to trying to reduce future inheritance tax, Clients tell me that the single most important asset they want to pass on is their home. It is no surprise, therefore, when talking to Clients about care home fees, the asset they want to protect the most is that very home.

If someone permanently enters residential care, owning their own home and they are subject to means-testing, their home is disregarded for the first 12-weeks. What “disregard” means in this context is quite literal – for the purposes of means-testing the home does not exist for those first 12-weeks. All other qualifying assets will be taken into account, but not your home.

The minute the 12-week disregard expires, the home, in the eyes of the Local Authority, is no longer a pile of bricks, but a pile of pound coins to the market value of the property. So, someone qualifying for Local Authority assistance during the 12-week disregard, because they have insufficient income/assets, could find themselves being immediately responsible for the full cost of care.

At the end of the 12-week disregard, the are basically two options, sell the property or apply for the Deferred Payment Scheme.

If the spouse is still at home then the disregard continues. It would also continue if a child of the resident was also sharing the property, but they must be able to demonstrate that it is their habitual residence and be over 60, under 18 or disabled, if between those ages. The disregard may also continue if other relatives – and there is a fairly lengthy list of what constitutes a “relative” – can demonstrate that the resident’s home is also their habitual residence. If the relative permanently leaves the property, for whatever reason, the disregard continues for the first 12-weeks and then the property becomes a pile of pound coins.

I have come across a few cases recently where family members have given-up their own home and moved in with an elderly relative to assist with their care, but, through a subsequent deterioration in their health, that elderly relative has had to enter a care home. This can throw-up some unforeseen problems with the disregard if the cohabitees do not fit into the precise categories of qualifying family members. Consequently, it is essential that families take professional advice, long before formal care is required, to ensure that the Local Authority won’t insist upon the home being sold or a commercial rent paid.

If the entry into residential care is only of a temporary nature, then the disregard can be as much as 52-weeks. However, as soon as the entry into a care home becomes permanent the 12-week rule applies from the date of the termination of the temporary residence.

The 12-week disregard is mandatory.

If you need help or advice regarding the payment of care fees, please contact me using the form below.

    - Care Fees Planning

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    About Clive Barwell

    Clive Barwell is one of the most experienced and qualified financial planners working in the later life market today, he specialises in advice and guidance for the over 55s. To ask Clive a question, please email him at Alternatively, you can follow Clive on Twitter, connect with Clive on LinkedIn or see Clive's profile on Google+.