The Government has announced a new scheme to assist the elderly with paying for residential care. Under the scheme, pensioners will be able to defer paying for their care until after their death.

Last year, nearly 25,000 homes were sold in order to pay for care. The main aim of the new legislation appears to be to reduce the number of elderly people forced to sell their homes for this purpose.

The new scheme will encourage the elderly to apply for government-backed loans (to be known as ‘universal deferred payments’) to fund their care. Although no figures have been confirmed, the Government has said that the interest charged on these loans will be ‘nominal’.

The loans will become repayable upon death and if the deceased’s estate does not hold sufficient cash assets to settle the debt, the children would have to sell their parent’s property at that point in order to pay.

The scheme will not affect those currently entitled to free care, as the £23,250 threshold will remain unchanged.  However, for those with assets over this amount, it will allow them to avoid having to sell their property during their lifetime to fund care.

In our opinion, although this may sound like good news to most people, in reality it is not far removed from the current system. Currently, if no cash assets are available to fund care and the family do not want to sell the property, then the sale can either be forced or a charge entered on the deeds enabling the Local Authority to recover the costs of care when it is sold.

In fact, if no one is living in the property when the elderly person has moved into residential care, surely from a financial viewpoint it is preferable to sell the property then and use the funds to pay for the care; rather than take out a loan and have to sell the property a few years down the line to pay it off (plus interest)?

For those worried about care fees and the depleting affect they may have on your estate, there are other things you can do to mitigate them. For further information, please call us on 0800 028 2837