Care Fees & Property Guide

Can you protect an inheritance from care home fees?

One of the most common worries families have is whether an inherited property could be used to pay for care home fees. The rules around care funding, means testing, and deprivation of assets are complex. This guide explains what you need to know.

How care home fees and property are assessed

When someone needs residential care in England, the local authority carries out a financial assessment (means test) to determine how much the person should contribute towards their care costs. This assessment looks at all of the person's assets, including property, savings, investments, and income.

If the person's total assets exceed 23,250 pounds (the upper capital limit in England), they are classified as a self-funder and must pay the full cost of their care. The average cost of a care home in England is approximately 800 to 1,200 pounds per week, or significantly more for nursing care.

Property is included in the assessment unless it qualifies for a mandatory or discretionary disregard. This is why families are often concerned about what happens to the family home or an inherited property when care is needed.

When property is disregarded from the assessment

The local authority must disregard (exclude) the value of a property from the means test in certain circumstances:

Spouse or partner still living there

If your spouse, civil partner, or cohabiting partner continues to live in the property, its value must be disregarded from the care fees assessment for as long as they remain there.

Relative aged 60 or over

If a relative aged 60 or over is living in the property as their main or only home, the property must be disregarded. This includes parents, siblings, adult children, and other relatives.

Disabled or incapacitated relative

If a relative who is disabled or incapacitated (regardless of their age) lives in the property, it must be disregarded from the assessment.

Dependent child under 18

If a dependent child under 18 lives in the property, its value must be disregarded.

First 12 weeks in permanent care

For the first 12 weeks after someone moves into permanent residential care, their property is disregarded from the means test. This is called the 12-week property disregard and gives families time to make decisions about the property.

Deprivation of assets: what you need to know

The deliberate deprivation of assets rules are the biggest concern for families trying to protect property from care fees. If the local authority believes you have deliberately given away, sold at undervalue, or otherwise disposed of assets to reduce the amount you need to pay towards care, they can treat you as still owning those assets.

There is no specific time limit for how far back the local authority can look. The key question is whether a significant motivation for the disposal was to avoid paying for care. If you gave your house to your children 20 years ago with no thought of care fees, it is unlikely to be treated as deprivation. If you transferred it last year after receiving a diagnosis, it almost certainly would be.

The burden of proof is on the local authority to demonstrate that avoiding care fees was a significant motivation. However, the closer in time the disposal is to the need for care, the easier it is for them to make this case.

Important

The deprivation of assets rules apply to any disposal of assets, not just property. This includes giving away savings, transferring investments, and spending money on items that do not represent fair value. The rules are designed to prevent people from artificially reducing their wealth to qualify for local authority funded care.

Legitimate steps you can take

While there is no guaranteed way to protect all your assets from care fees, there are some legitimate steps that may help:

Deferred payment agreements

If you need to pay care fees from the value of your property, the local authority must offer a deferred payment agreement. This allows you to defer the care costs, with the local authority placing a charge on the property. The debt is repaid when the property is eventually sold. This prevents you from having to sell the property immediately to fund care.

Plan well in advance

The earlier you plan, the stronger your position. If you transfer assets or restructure your finances many years before any care needs arise, it is much harder for the local authority to argue deliberate deprivation. Ideally, any planning should be done while you are in good health and there is no foreseeable need for care.

Take professional advice

Care fee planning is a specialist area of law and financial planning. A solicitor or financial adviser who specialises in later-life planning can help you understand your options and structure your affairs in a way that is both effective and compliant with the law.

Consider selling and investing

If you inherit a property that you do not want to keep, selling it at market value is a legitimate transaction (not deprivation). You can then invest the proceeds in a way that may provide income while preserving capital. The key is that the sale must be at fair market value.

Selling an inherited property when care fees are a concern

If you have inherited a property and are concerned about care fees (whether for yourself or a family member), selling the property at fair market value is a perfectly legitimate option. This is not deprivation of assets because you are receiving full value in return.

A quick cash sale through HouseBought4Cash can help you convert the property into cash efficiently, giving you and your family more flexibility in how you manage the funds. We buy inherited properties in any condition, with no chain and no fees.

Getting the property valued independently before selling is important, both for probate purposes and to demonstrate that any sale was at arm's length and for fair value. This protects you from any future questions about deprivation of assets.

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Frequently asked questions about care home fees and property

Common questions about protecting inherited property from care fees.

The council cannot take your house, but they can include the value of a property you own in their financial assessment (means test) when calculating how much you should contribute towards care costs. If you have assets above the upper capital limit (currently 23,250 pounds in England), you will be expected to pay the full cost of your care. However, in certain circumstances the property may be disregarded from the assessment, such as when a spouse, partner, or dependent relative still lives there.

Deliberate deprivation of assets is when someone intentionally reduces their assets to reduce the amount they have to pay towards care costs. If the local authority believes you have deliberately given away money, property, or other assets to avoid paying for care, they can still include the value of those assets in their financial assessment. This applies even if the assets were given away years before care was needed, if the purpose was to avoid care fees.

Placing your house in a trust does not guarantee it will be protected from care fee assessments. If the local authority believes the transfer was made to avoid paying for care (deliberate deprivation), they can treat the property as if you still own it. However, if the trust was set up many years before any care needs arose and for genuine reasons unrelated to care (such as tax planning or protecting assets for your children), it is less likely to be challenged. Legal advice is essential before setting up a trust.

A property must be disregarded (excluded from the means test) in certain circumstances: when your spouse, civil partner, or partner still lives there; when a relative aged 60 or over lives there; when a relative who is disabled or incapacitated lives there; or when a child under 18 who is your dependant lives there. The property may also be disregarded at the local authority's discretion in other circumstances, such as when a carer who gave up their own home lives there.

In England, if you have assets above 23,250 pounds (the upper capital limit), you are expected to pay the full cost of your care. Between 14,250 and 23,250 pounds, you make a contribution based on a tariff income calculation. Below 14,250 pounds (the lower capital limit), your capital is not counted in the assessment. These thresholds apply to your total assets, including property, savings, and investments. The property is included unless it qualifies for a disregard.

You are free to sell an inherited property at any time. However, the proceeds of the sale will form part of your capital and be included in any future care fees assessment. If you sell the property and give the money away, this could be treated as deliberate deprivation of assets if you later need care. If you sell at market value and keep the proceeds, this simply converts the asset from property to cash, which does not change your overall financial position for care fee purposes.

If you inherit a property while you are already in a care home, the value of that property will be included in your financial assessment from the date you inherit it. This may mean your contribution to care costs increases. If the inherited property is your only property and you were not living in it, it will be included at its market value. If you need to sell it to pay care fees, a quick cash sale can help you manage the process efficiently.