Are Next of Kin Responsible for Care Home Fees? A Simple Guide

Key Takeaways

• You are not legally obligated to pay for your loved one’s care home fees, unless you’ve signed a prior agreement.
• Your loved one’s assets and income will be assessed to determine how much they can contribute to their care costs.
• There are various options for funding care, including self-funding, council funding, and NHS support.
• Be cautious about transferring assets to avoid care fees. Always seek professional advice before taking such actions
• Any outstanding care home fees will be paid from your loved one’s estate after they pass away
• Councils have 90 days from death to claim back deferred payment agreements
• There is no time limit on how far back councils can investigate asset disposal

Understanding Care Home Fees in the UK

Making the decision that your loved one needs the support of a care home often comes with a mix of emotions. Alongside the focus on ensuring they get the best possible care, there are naturally financial concerns. One of the most common questions families ask is whether they’ll be responsible for covering the costs of care.

It’s important to understand that in the UK, the primary responsibility for care home fees rests with the individual receiving care.  However, this doesn’t mean you’ll be left completely on your own.  The local council (your local authority) will conduct a financial assessment, often called a “means test,” to determine how much your loved one can contribute based on their income and assets.

Funding Sources

There are three main ways care homes are funded in the UK:

• Self-funding: If your loved one has sufficient savings or income, they can pay for their care directly.
• Council funding: Your local council may provide partial or full funding based on the results of the financial assessment.
• NHS funding: In some cases, where care needs arise primarily from a health condition, the NHS may provide funding for care.

The Role of Next of Kin

While it’s a common misconception, you are not automatically obligated to pay your loved one’s care home fees.  The responsibility ultimately rests with them unless you have signed a specific contract with the care home agreeing to cover the costs.

However, there are instances where you may choose to contribute financially:

• Top-up fees: If the council is providing funding but it doesn’t cover the full cost of your preferred care home, you may choose to pay a “top-up fee” to cover the difference. It’s important to note that you’ll need to sign a contract with the council before agreeing to these payments.

How Long Can Councils Claim Back Care Home Fees After Death?

This is one of the most crucial aspects for families to understand:

Deferred Payment Agreements

If your loved one had a Deferred Payment Agreement with the local council, the debt becomes payable 90 days after their death. During this 90-day period:

• Interest charges will continue to be added
• The executor or family must arrange repayment, typically through the sale of the property
• The council can recover the amount owed through the courts if the executor doesn’t repay within 90 days

Outstanding Care Home Fees

Any unpaid care home fees at the time of death will be settled from your loved one’s estate. These debts are prioritised before any inheritance is distributed to beneficiaries.

Asset Recovery – No Time Limit

Importantly, there is no time limit for how far back councils can investigate potential asset disposal. There is no specific time limit for how far back a local authority can look at financial affairs to determine if there has been deprivation of assets. This means:

• Councils can investigate asset transfers made many years before care was needed
• There is no correlation between the 7-year inheritance tax rule and care home fees
• The key factors are timing, motivation, and whether the person could reasonably expect to need care

Protecting Assets – What You Need to Know

It’s understandable to want to protect your loved one’s assets. However, be aware that if you deliberately transfer assets or money with the intention of avoiding care fees, the local council may investigate and view this as “deprivation of assets.”

What Constitutes Deprivation of Assets

The council may consider various actions as deliberate deprivation, including giving away lump sums, sudden extravagant spending, transferring property deeds, or converting assets into excluded items.

The 7-Year Rule Myth

There is no 7-year rule for care home fees. Many people believe that if you gift assets at least seven years before moving into a care home, your local authority won’t consider them during a financial assessment. However, this isn’t the case. This rule applies only to inheritance tax, not care home fees.

Consequences of Deprivation

If the council determines that assets were deliberately disposed of to avoid care fees, they can:

• Treat the person as still owning those assets for assessment purposes
• Claim money owed through the courts if contributions cannot be made
• Recover funds from the person who received the assets

Professional advice is essential. A financial adviser specialising in elder care or a solicitor can help you make informed decisions that won’t jeopardise your loved one’s financial wellbeing.

Care Fees After Death – What Happens Next

In the unfortunate event that your loved one passes away, here’s what you need to know:

Immediate Steps (First 90 Days)

1. Contact the care home to discuss final fees and room clearance
2. Notify the council if there’s a Deferred Payment Agreement
3. Arrange property valuation and sale if needed to repay debts
4. Gather all financial documents for the executor

Priority of Debts

Care home fees and council debts are prioritised before inheritance distribution. This includes:

• Outstanding monthly care home fees
• Deferred Payment Agreement debts (with accrued interest)
• Any administrative charges

Family Protection

Remember: Next of kin cannot be forced to pay these debts from their own resources unless they’ve signed agreements to do so.

Options and Support

Navigating funding for care can be overwhelming. Fortunately, there’s support available. Alongside the main funding sources, consider these options:

Equity release: Unlocking funds tied up in your loved one’s property.

Care annuities: An insurance product providing guaranteed income for care costs.

Long-term care insurance: A policy for potential future care needs.

Personal health budgets: Council or NHS-funded budgets for personalised care.

Care support grants: Charities or local authorities may offer grants.

Veterans funding for care: Support may be available for ex-service personnel.

Important: Always consult relevant government websites, Age UK, and organisations specialising in care for the most up-to-date information and resources.

Related Information and Resources

For more guidance on care-related topics, you might find these resources helpful:

• Understanding the different types of care homes – Learn about residential care, nursing homes, and specialist dementia care
• Steps to getting into a care home – A practical guide to the admission process
• Care home top-up fees – Understanding additional costs and who pays
• How to choose the right care home – Essential factors to consider
• Coping with a loved one in a nursing home – Emotional support and practical tips

Feeling Overwhelmed by Care Options?

Let our dedicated, compassionate team at Lidder Care guide you through the process of getting care at one of our homes. Contact us today to find the best solutions for your loved one.

Frequently Asked Questions (FAQs)

What if my loved one doesn’t have enough savings or income for care fees?

The local council may provide financial assistance based on their assets and income. Additionally, check if they are eligible for benefits like Attendance Allowance or NHS Continuing Healthcare.

Can I be forced to sell my parent’s home to pay for care?

You won’t be forced to sell their home while they’re living in the care home. Consider exploring a Deferred Payment Agreement with the local council, which allows the care fees to be paid later from the sale of the house.

How does a Deferred Payment Agreement work?

A Deferred Payment Agreement is essentially a loan from the council, using your parent’s home as security. The council pays the care fees on your behalf, and the debt is repaid when their home is sold, typically within 90 days of death.

How long after death can the council claim back care fees?

For Deferred Payment Agreements, the debt becomes due 90 days after death. However, there’s no time limit for councils to investigate potential asset disposal that occurred before care was needed.

Are there ways to reduce care home costs?

Your loved one might qualify for partial funding from the council. It’s advisable to compare costs between different care homes in your area. Also, ensure they are receiving all the benefits they are entitled to.

What’s the difference between the 7-year inheritance tax rule and care fee rules?

The 7-year rule applies only to inheritance tax – when you live for 7 years after making a gift, it won’t count towards inheritance tax. However, this rule doesn’t apply to care home fees. Councils can investigate asset disposal regardless of how long ago it occurred.

Can the council claim money from me as next of kin?

No, unless you’ve signed an agreement to pay. Next of kin are not legally responsible for care home fees. The debt must be settled from the deceased person’s estate.

Important: Always seek professional financial advice to fully understand your options and make the best decisions for your loved one’s care.