Council has the authority to compel the sale of a bungalow, if it's deemed necessary to cover care costs for the owner's mother.
Woman Questions If Local Authority Can Make Her Sell Mother's Home for Care Costs
A reader inquired about the legality of a local authority compelling a sale of a £150,000 bungalow in Port Talbot, Wales, which has been placed in a trust since 2015, to cover any potential care and housing costs. The home's owner, the woman's mother, is currently in an elderly mental health ward and is suffering from depression and anxiety.
Should the mother's care requirements necessitate a move into sheltered housing, the reader wonders if the local authority could mandate the sale, as she is listed as the beneficiary of the trust, with her mother remaining as the tenant.
Harvey Dorset, of This is Money, offers insight into this complex and pressing issue, highlighting that self-funding for care is the norm for most care seekers. In 2024, data from Carehome.co.uk indicated that only 16% of care seekers were able to secure funding from their local authorities, while an overwhelming 66% were self-funding.
When it comes to the woman's mother's property, the key issue hinges on intention. Financial adviser Natalie Donnell emphasizes that when the local authority conducts a capital assessment to determine who is responsible for funding care (either self-funding or funded by the local authority), intent plays a crucial role.
Donnell advises that if the local authority deems that the property was put into a trust in 2015 with the intention of bypassing future care fees, they could consider it a case of 'deliberate asset deprivation.' This could result in the mother being treated as still owning the asset and the property potentially being used to fund her care.
Adam Johnson, director at SJP partner practice New Forest Wealth Management, adds that the local authority's assessment of the circumstances dating back to 2015 will be crucial in determining whether the trust holds under scrutiny. If the mother's care needs are deemed primarily health-related, the value of her property will be disregarded entirely, as the NHS will cover costs associated with her care. However, if care is means-tested, the local authority will assess the mother's income, savings, and assets, potentially including the value of her home if she is no longer living there or if the trust is deemed to have been created with the intent to evade care fees.
The woman is advised to seek specialist independent advice to understand whether the trust could potentially fall under the category of 'deliberate asset deprivation' and to explore any possible actions to mitigate against this potential outcome.
This complex issue underscores the importance of careful planning in long-term care funding, as many care seekers find themselves self-funding due to limited local authority support. Understanding inheritance tax planning and financial planning can help ensure one's wealth is as secure as possible both during and after retirement.
Resources and links to further information about financial advice, planning, and inheritance tax are provided at the end of the article for those seeking assistance in sorting their finances.
Sources:[1] Natalie Donnell, independent financial adviser at Flying Colours[2] Adam Johnson, director at SJP partner practice New Forest Wealth Management[3] Carehome.co.uk: 2024 data on care seeker funding[4] This is Money: Help with financial advice and planning[5] Trusts of Land and Appointment of Trustees Act 1996 (TOLATA)[6] Inheritance tax planning guidance
- The reader is questioning the legality of a local authority requiring the sale of a £150,000 bungalow for potential care and housing costs, as the home is in a trust since 2015.
- The mother, currently in an elderly mental health ward, is listed as the beneficiary of the trust, with her remaining as the tenant.
- Harvey Dorset, of This is Money, says that self-funding for care is common, with only 16% of care seekers receiving local authority funding in 2024.
- Financial adviser Natalie Donnell notes that intention plays a significant role in the local authority's capital assessment for care funding.
- Donnell warns that if the local authority deems the property was placed in a trust in 2015 to bypass future care fees, it could be considered 'deliberate asset deprivation.'
- Adam Johnson, director at SJP partner practice New Forest Wealth Management, highlights that the local authority's assessment of circumstances dating back to 2015 will determine whether the trust holds under scrutiny.
- If the mother's care needs are health-related, the value of her property will be disregarded, as the NHS will cover associated care costs, according to Johnson.
- In light of the complex issue, the woman is encouraged to seek specialist independent advice to understand potential actions to mitigate against 'deliberate asset deprivation' and explore inheritance tax planning for secure retirement finances.
