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Adverts that promise you can avoid care home fees are seriously misleading

Posted on 22nd September 2016

Many people are concerned that the cost of their future care home fees will reduce their children’s inheritance. So they are interested in finding ways to avoid having to pay fees.

The local authority has a duty to provide residential care for the elderly and disabled if such care is needed. The local authority carry out a means test and if you have more than £23,250 in capital then you must pay the care home fees from your own funds without any assistance from the public purse.

Your home will be disregarded on means testing if your spouse is still living in it. But if there is no spouse, the property is usually sold in order to pay for the care home fees.

It is not hard to find advertisements on the internet and elsewhere which promise to set up a particular kind of trust so as to reduce any liability for care home fees.

The idea is that you will put your savings or property into a trust with the consequence that the property is excluded from means testing.

However, local authorities can refuse to fund care home fees if you have deliberately given capital or property away with the express purpose of becoming eligible for state funding. This is known as the rule against deliberate deprivation of capital.

A lot of local authorities are struggling to meet their statutory obligations due to extensive budget cuts so they are examining applications for state funding very carefully in order to check that there has not been any attempt to hide assets, whether by gift or by setting up a trust.

Some local authorities have taken cases to court in order to get such trusts revoked on the grounds that setting up the trust was a breach of the rule against deliberate deprivation of capital.

The courts look carefully at the reason for setting up the trust in the first place. If the only reason for setting up the trust was to avoid having to pay care home fees in the future, the trust will be ignored and you will have to pay the fees in full.

The irony here is that if you have answered an advert which promises to set up a trust to avoid care home fees, the advertisement itself will be sufficient evidence to show that the sole purpose of the trust was the deliberate hiding of capital. This will render the trust null and void and will result in you having to pay care home fees in full.