What is a 12-week property disregard?
Funding residential care is a large financial commitment that in most cases requires a property sale at some stage. In some cases this does not need to happen for months or even years after a resident has moved into the care home of their choice. In other cases, it needs to happen much sooner.
When a resident is considered by the local authority to have sufficient wealth to pay for their own care but this wealth is tied up in the value of their home and they do not have sufficient liquid assets to cover the cost of their care, a 12 week property disregard may be something to consider.
In all cases where a resident will be funding their care, whether in part or in full, they are strongly advised to seek independent advice from a Society of Later Life Advisor (SOLLA). These are accredited and specially trained Independent Financial Advisors (IFAs) who can support them with guidance and differing options of how to fund their care.
The basic rule with regards to self-funding is that should you live in England and have total assets of more than £23,250 or £24,000 in Wales, you will be required to fund the entirety of your care costs. However, if your savings or other liquid assets are less than this amount and you own a property that you intend to sell for the funding of your long-term care the local authority must disregard the value of your property for the first 12 weeks of you moving into a care home on a permanent basis provided you meet their ‘eligibility criteria’ (i.e. they agree you need to move into a care home).
Now that this property value has been disregarded and you fall below the threshold the council are legally required to fund your care for this 12-week period or until your home has been sold whichever is sooner.
How much will they pay?
The local authority have standard amounts that they will pay towards an individual’s care which are based upon a number of factors such as type of and level of care needed, but this amount will in many cases be set and non-negotiable. Most of the time this will be lower than the fees charged by your chosen care home. In such cases the home may require a top-up payment which can be made from any remaining savings you have or often a third party pays the top-up and then recovers that money following the house sale.
It is important to note that the Local Authority does not necessarily pay the full amount of their publicised rate, instead they pay up to a maximum of this rate minus the assessable income of the individual.
For example, if your local authority’s standard contribution is £500 per week and you have assessable income of £300 per week, they will be pay the difference between the two which is just £200 per week. If the fees at your chosen care home are £900 per week, for example, the care home will probably expect a £400 per week top-up to be made.
Whatever financial support is provided by the Local Authority during this 12-week period does not have to be repaid to the local authority.
What happens after the 12 weeks?
If the property has still not been sold after 12 weeks the local authority should be able to lend you the money to pay for your care through a deferred payments agreement. This is different to the disregard period as in this case all the money that the Local Authority provides is recovered when your property is eventually sold. In most cases a charge will be placed on the house so that they ensure they receive the money they have leant you. Before entering such an agreement you should take independent legal advice from an appropriately trained and qualified care fees planning specialist.
One important thing to note is that if the local authority knows you own your own home but do not tell you about available disregards, they could be liable to reimburse you if they fail to allow a statutory disregard and you pay more towards your care costs than you should have as a consequence.