Ensuring you know your rights on residential care costs
ONE of the most common questions asked by clients in relation to wills is how to protect their assets to pass on to their loved ones.
It is not usually inheritance tax which causes most concern but rather residential care costs. As there is no cap on the amount of money we in Northern Ireland have to pay towards our care costs, it is a worry for many.
In Northern Ireland, the Health and Social Care (HSC) Trusts have a discretion to charge for domiciliary care and an obligation to charge for residential care costs. It is important to note that any assessment for residential care is based on capital and income.
There are two thresholds for capital - the higher limit of £23,250 and the lower limit of £14,250. Most assets over £23,250 are taken into account when assessing whether a person is required to pay for residential care with assets below £14,250 being disregarded.
The HSC can carry out financial assessments on all patients requiring care. When assessing a person's eligibility to residential care and the costs involved the HSC Trust will look at your capital and your income. Income can include earnings, SSA benefits pensions and annuities.
You cannot deliberately seek to avoid care costs by gifting your property or putting your house in a trust. By purposely giving away, for example, your family home there is a risk that it is seen as depriving yourself of assets.
Where there is a deliberate deprivation of assets the receiver of that gift may become liable for your care costs. There is no time limit on this deprivation, many people confuse the seven-year rule for the potentially exempt transfers (PETs) in relation to inheritance tax with the transferring of assets.
There may be a scenario in which your main home is disregarded in relation to residential care costs but these would be specific to your own situation and should be discussed further with your solicitor.
There a number of risks involved with the transferring of an asset. These risks involve debt, death and divorce. If you transfer an asset to someone else you have effectively given up your right to that asset.
The transferred asset becomes the property of the person you have transferred it to and as such will be taken into account in any divorce proceedings they may be involved in.
Therefore if it is your home you have transferred, you could find yourself in a situation where your home must be sold to settle divorce proceedings. Also, if the receiver of your asset gets into debt, the asset could be used to pay their debt. Finally if that person dies they may leave that asset to someone else without you having any say in the matter.
Having a well drafted will can assist in protecting your assets for your family and even their family and beyond. The peace of mind of knowing that your assets are safe can be invaluable.
It is important to get the correct advice and not rely on hearsay. Getting advice early can ensure that you are not left in a situation where you have limited options.
:: Judy Rose (email@example.com) is associate solicitor (conveyancing, wills, trusts and estates) at O'Reilly Stewart Solicitors (www.oreillystewart.com) in Belfast