WILL I HAVE TO SELL MY HOME WHEN I MOVE INTO A CARE HOME?

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1 WILL I HAVE TO SELL MY HOME WHEN I MOVE INTO A CARE HOME? This leaflet is for guidance only and, accordingly, whilst every care has been taken to ensure its accuracy, it is not intended to be a complete statement of the law. It is also no substitute for independent legal professional or financial advice and you should seek such advice rather than relying on the contents of this leaflet for financial planning purposes or if you are in any doubt as to your rights here. This guidance has also been based upon the law as at the date of its publication (which can be found at the end of this guidance leaflet) and, in particular, Section 22 of the National Assistance Act 1948, Section 6 of the Community Care and Health (Scotland) Act 2002, the National Assistance (Assessment of Resources) Regulations 1992 (as amended) and the Community Care (Deferred Payment of Accommodation Costs) (Scotland) Regulations However, the law is subject to change and the continued accuracy of this leaflet cannot be guaranteed. The information in this leaflet is intended to be read with the Scottish Executive Booklet "Thinking About Moving into a Care Home?" which is available free online via the Scottish Executive website on or a hard copy from Blackwell's Bookshop, 53 South Bridge, Edinburgh, EH11 1YS. Assessing the Capital Value of Your Home The information below is about your main residence. If you own any other property its value will be counted as capital. The value of your home may be counted as capital for financial assessment purposes. The Council disregard the value of the home you normally reside in if you are only temporarily in care e.g. respite and temporary admissions. We also disregard the value of the house you normally reside in if it is occupied by any of the following people:- Your partner or former partner (except where you are estranged or divorced from your partner/former partner) A relative who is over 60 A relative who is incapacitated A relative under 16, whom you are liable to maintain A lone parent who is your estranged or divorced partner Page 1 of 6

2 (A relative is defined as: - parent, parent-in-law, son, son-in-law, daughter, daughter-in-law, step-parent, step-son, step-daughter, brother, sister, grandparent, grandchild, uncle, aunt, nephew, niece, or the spouse, civil or unmarried partner of any of these). These are the most common capital "disregards". There are others broadly equivalent to the capital disregards for Income Support assessment purposes. If you wish to make a query on the existence of a specific disregard, please see the contact details given at the end of this guidance leaflet. 12 Week Disregard If you move into a care home permanently, the care home becomes your normal home. If we are not going to ignore (disregard) the value of your house because none of the circumstances set out above apply to you, we still ignore the value of your home for the first 12 weeks. This is to allow you time to consider the options available to you for paying the costs of your care. If you expect your stay in a care home to be temporary and it then becomes permanent, we ignore the value of your home during the temporary period and then for another 12 weeks from the date you become a permanent resident. After this 12 week period ends, we will count the value of your home as capital, less any debt secured on it (such as a mortgage) and less the costs of selling your home. The net value of your home is then added to the value of any other property and any actual and notional capital, which you hold. If the total assessed capital is in excess of the upper capital limited (currently 20,750 for 2007/2008) you will only qualify for your free personal and nursing care entitlement if you are assessed as needing it. Angus Council will make this payment directly to the care home on your behalf. You will not qualify for any additional financial assistance until your assessed capital has reduced to 20,750 or less. Page 2 of 6

3 Deferred Payments If you do not wish or are unable to sell your home immediately and you can answer 'yes' to all the bullet points below then you may apply to Angus Council to defer payment. An application form is enclosed with this guidance for this purpose. You have been assessed as needing a care home place You would not normally have your home disregarded from such a financial assessment (such as the first 12 weeks of permanent residential care; residential care on a temporary basis; where your home is occupied by your spouse or partner or a relative or family member who is aged 60 or over or is incapacitated; or where the authority uses its discretion to disregard the home: this restriction applies only to deferral of the relevant portion of normal care costs) your other assessed capital is at, or less than the lower capital limit, currently 12,500 for 2007/2008 you cannot meet the full cost of the care home from your income you are prepared to grant a standard security against your home the value of your interest in your home is sufficient to meet the Council's reasonable estimate of the total amount of deferred payments; and the Council considers that you are still able to pay any mortgage on your home along with any care home charges due to the Council:- Each deferred payment request will be looked at on its own merits and payment will be dependent on resources available. If we accept your application, we will provide financial assistance to pay for your care home fees, which you must agree to repay either when your house is sold, or from your estate when you die. You can only defer making part of your payments, we will still expect you to contribute an amount from your income towards your care home fees. A deferred payments agreement needs to be signed by you and the Council and will be legally binding. Repayment will be secured by a Standard Security over your home. This would allow the Council to force the sale of your home if you (or your executors) defaulted in repayment of the deferred amount. The Council would always recommend that you obtain legal advice before signing. Page 3 of 6

4 Example The approved rate for nursing care for elderly people in Angus is currently a week. We will pay the first 210 a week (using the free personal and nursing care payment). This leaves a week to pay for your accommodation costs. You would normally have to pay this whole balance from your own income and capital. However, if you apply to defer making the payments, we work out how much we expect you to pay as follows. First, we work out your weekly income. We count your pensions and any income you receive from renting out your house is taken into account in the financial assessment for example, if you get a week from your State Pension and a week from renting out your house, your income will be We will allow from this amount for personal expenses allowance. This leaves , which, we call your available income. Weekly income State and work pension Income from rent Personal expenses allowance Available income We expect you to put your available income towards paying for your care home fees. So, we take your available income ( ) from the accommodation costs ( ), which leaves a balance of a week to pay ( a year). We will pay this for you and treat it as a debt. Before we accept your application to defer making your care-home payments, you must show us proof that you own your home and proof of any debts secured on it. If you are acting on behalf of someone going into a care home, you must provide proof that you have full legal authority to act on their behalf. We will treat the deferred payment as a debt and secure it on your home using a standard security. You will need to appoint a solicitor about the agreement and the standard security. There will be costs involved in this, which you will need to pay. The Council will also require an up-to-date formal valuation of your home. It will instruct this directly but these will be costs to you. However, the Council may also agree to include those costs in the Deferred Payment Agreement, subject to budget availability as explained below. Entitlement to a deferred payment is at the discretion of Angus Council. Page 4 of 6

5 When considering an application to defer payment, all the facts and circumstances are taken into account, for example factors such as:- your age your health the length of deferred payment applied for the value and condition of the property whether there are any other debts secured on the property the availability of funds after that, applications will be given priority in terms of earliest application date We must also take into account the funds available to us for making deferred payments. We do not charge interest on the deferred payments until you end the agreement or until 56 days after you die. We will then charge interest at a reasonable rate, which we will decide. The free personal care and nursing care payments we make do not count as deferred payments and we will not ask you to pay these back. If you want to discuss deferring your payments please phone Tony Fitzgerald, Principal Contracting Officer, on or write to him at: St Margaret s House, Orchard Loan, Forfar. The standard Form of Deferred Payment Agreement is also available from that office so you may consider and take advice on its terms in advance, if you so wish. Page 5 of 6

6 Charging Orders You should also note that, after the 12 week disregard period, if you do not enter into a deferred payments agreement with the Council but debts accrue to the Council for unpaid care home charges, then the Council may elect to place a Charging Order over your home (or any other land or property owned by you). This is intended to be for situations where residents are able but unwilling to pay for their assessed care costs. However, the practical effect is similar to that of a deferred payments agreement in that repayment liability is secured over your home interest-free until you sell your home or the day after your death. There are also no solicitors' fees payable as the Charging Order is imposed by the Council rather than agreed. However, a 102 legal fee is charged to the service user/executor when the local authority requests discharge of a Charging Order. The potential disadvantage for you compared to a deferred payments agreement is that the Council may decide at any time to pursue other legal measures to compel payment of arrears irrespective of the Charging Order (if it elects to place a Charging Order at all), for example if the arrears become too high to be likely to be covered by the net value of your home (after deducting any prior secured debt). Page 6 of 6