Navigating Scotland's care system: what you need to know

When a person moves to a residential care home, the starting position is that they should pay for their stay, unless they cannot afford to do so. In Scotland, everyone, regardless of income or assets receives free personal and / or nursing care if they have been assessed as needing it.

The personal and nursing care payment rates for 2023 are: -

1. £233.10 per week for personal care (£12,121.20 annually).
2. £104.90 per week for nursing care (£5,454,80 annually).

As a typical care home can cost between £40,000-£45,000 per annum (often much more), there may still be a significant amount to be paid by the resident.

In determining whether a resident can afford to cover the cost of care, the relevant local authority will carry out a financial assessment. This will involve taking account of both the income and capital available to the resident. Income will include payments received from a state and private pension, dividends, and rental income. Capital includes the value of any heritable property or land owned by the resident; money in bank or building society accounts; stocks and shares; premium bonds; and, in certain circumstances, the value of a trust fund of which the resident is a beneficiary.

What are the capital limits?

The upper capital limit is £32,750 and the lower limit is £20,250. If a resident is assessed as having capital above the upper capital limit, then they will not be eligible for help with funding from the local authority ( other than free personal/ nursing care).

If a resident has capital between the lower and upper limit, they must make a contribution towards the cost of residential care but will receive some support from the local authority.

A resident who has capital of £20,250 or less will receive funding from the local authority to cover the cost of their care.

Excluded capital

The value of your home is automatically disregarded for the first 12 weeks in care. The purpose of this initial 12-week disregard is to allow the local authority to carry out a full financial assessment for the purposes of determining how your place in the care home will be funded.

A resident's home will continue to be disregarded where: -

• Their stay in a care home is temporary;
• The property is occupied by a spouse, partner or civil partner; or
• The property is occupied by a member of your family who is (i) aged 60 or over; (ii) is incapacitated; or (iii) is a child under 16 for whom you are responsible.
  

Can the local authority force the sale of a property?

Technically, the local authority cannot force the sale of the property. However, on a practical level, if the value of a resident's home cannot be disregarded for the reasons stated above, then it will form part of the financial assessment. If the resident does not have other liquid assets (such as savings, cash, premium bonds or stocks and shares that can be sold), then the resident and / or their family are often left with little choice but to sell the property.

If there is a delay in selling the property, the local authority may choose, at their discretion, to pay the resident's fees on a short-term basis. They will then register a charging order (which is similar to a standard security or mortgage) over the property to ensure they do get their money back after the sale.

Potential mitigation of future care costs – gifting and liferent wills

Gifting:

Gifting assets is often used to mitigate exposure to future care costs. Gifting can be problematic for financial assessment purposes. The local authority has power to take gifts into consideration in a financial assessment where it is can show that the gift has been made for the purposes of avoiding care home fees and is therefore a "deliberate deprivation" of capital. If a gift has been made within 6 months of entry into a care home, the local authority has power to "claw back" its value and can take action against the recipient of the gift. If a gift has been made before 6 months from the date of entry into a care home, the local authority has no power against the donee but is still able to take its value into consideration in a financial assessment if it can show that it was made principally to avoid care home costs. This could cause practical difficulties for the resident in terms of actually funding their care if they are not able to use the asset previously gifted.

Liferent wills:

There is a way for married couples who own their house together to protect part of their house from residential care home costs. By putting in place a will that leaves the first to die's estate to the survivor in a trust, the first to die's estate can be protected against any residential care home assessment that might take place during the survivor's lifetime. This type of structure is robust from the deliberate deprivation risks that are associated with lifetime gifts, but it only protects half of the value of the house and has no advantage if both parties to the marriage are living in residential accommodation. Structuring a couple's wills in this way is likely to be more protective than a simple will leaving everything to the survivor outright.

Facing residential care can be a difficult and stressful time for the whole family. Being aware of what to expect allows you and your loved ones to feel more prepared. If you have concerns about the impact of care home costs in the future for yourself or for a relative, please speak to one of our experts.