We are often asked for advice in connection with the structure of somebody’s assets in connection with their lifetime planning. We do not give financial advice, however, we can give a general opinion as to a persons circumstances and the law surrounding such matters.
We are also involved in various appeals against local authorities, who have made an incorrect, or unjust assessment of a person’s ability to pay for their care fees.
However, there are situations where a property is to be bought, particularly in the current circumstances, as a number of people are down sizing, which and may result in a property being in joint names, and sometimes the property interest, or the amount of money, that is used for the purchase is on a un-equal basis.
This article is meant for some general advice as to such position.
As a general rule if you need residential care, and not considered ill enough for NHS continuing heath care, the local authority will calculate the value of everything that you own, including your portion of your home. If it comes to more than the thresh-hold of £23,250 you will have to pay for care.
If it comes to less than £23,250 you will not have to pay for care.
There are some circumstances where your home isn’t included in the calculation. If by the time you need care your co-owner is 60 or over, or incapacitated, your home will be excluded as general rule. If the co-owner is younger and in good health, you can still ask the local authority to use its discretion, to disregard the value of the property, given that it may have been bought as a family home.
Some authorities will seem to make an assessment where the co-owner is of a higher age, but each individual case stands on its own merits.
If the authority insists on valuing the property, you should buy the property in what is known as ‘tenants in common’ which means rather than the normal way of purchasing a property jointly, which is ‘beneficial joint tenants’, it means that each share is independent, and in those circumstances the local authority cannot take into account the value of the other person’s share.
This is a technical situation, and often authorities and person’s seeking care, do not understand that in obtaining the value of your share of the property in such circumstances, it would not just be 50% of the total value. It would be what the house would be worth to somebody buying that share – this would be considerably less, because they need to co-own this with the adjoining owner. This would have the impact of substantially reducing the value of the property, and may well bring it under the thresh-hold, refer to above and you won’t have to pay for care.
This is something that is often lost or misunderstood when making the application for funding. Most local authorities in our experience will not advise the applicant of this ability to reduce the value that is being contested.
Bare in mind that it may not just be your property interests that takes you above the thresh-hold, it may be other assets [known as liquid assets] such as bank accounts savings accounts, NS&I investments.
If the value of the house takes you over the thresh-hold, then it may still mean that you do not have to sell the property, as you can specify that if you have significant assets, aside from the property, you can agree that once those assets have been spent, then the money may need to be freed up from the property, or you could pay for your care home fees from other savings and investments.
In such situations it is often being the case that the co-owner, particularly if there is an un-equal share in the property, could be put in the position to effectively buy out your share, and that would be the determining price of the property at the time the assessment is made.
Local authorities, also as a rule will consider and help people in such situations, and it may well be that a ‘differed payment’ agreement is reached, where the local authority will in fact wait for their funds to be repaid from the future sale of the property, but that is a subject of another article.
Most lay people who enter into negotiations with local authorities, will also not understand that they have the option of challenging the local authorities decision, come what may.
In the first instance, notification should be made to the appropriate local authority, requesting that you use their complaint procedure.
If the authority still insists on counting the property value, you can ask for an independent review, and then take it to the ombudsman if it needs to be.
There have been many cases where by joint owners have not been forced to sell their properties at the time care is required, and they have won the right not to sell the property. In these circumstances, legal advice should be acquired.
If you have issues please do not hesitate to contact us.