For many people in the UK, the family home is not just a place to live – it’s a legacy to pass on to loved ones, built over decades of hard work and sacrifice. Yet with care home fees averaging over £26,000 per year and rising by 20% in the last five years alone, there’s growing anxiety that this most precious asset could be lost to fund long-term care. While no plan can guarantee complete protection, understanding how care fees work, the role of your will, and legitimate ways to safeguard your property can help you make informed decisions for you and your family.
Understanding the Rules: How Assets Are Assessed for Care Fees
Before exploring protection strategies, it’s critical to understand how local authorities calculate your care costs. Under the Care Act 2014 (which applies to England), a financial assessment (means test) is carried out to determine your contribution. For 2025–2026, the capital limits remain unchanged:
- If your total assets (including savings, investments, and in some cases property) exceed £23,250, you’ll be classed as a self-funder and must pay full care home fees.
- If assets fall between £14,250 and £23,250, you’ll contribute a means-tested amount based on your savings.
- If assets are below £14,250, the local authority will cover all care costs, with you paying only what you can afford from your income.
When it comes to your home, it will usually be included in the assessment if you move permanently into a care home. However, there are exceptions – for example, if your partner, a disabled or elderly relative, or a child under 18 still lives there. Even so, many families worry about what happens to the property once their loved one passes away, or if both partners eventually need care.
The Myth of Simple Solutions: Why Gifting Your Home Isn’t the Answer
One of the most common misconceptions is that transferring ownership of your home to children or other relatives will shield it from care fees. While gifting assets is a valid estate planning tool for inheritance tax purposes (under the seven-year rule for potentially exempt transfers), this does not apply to care fee assessments.
If the local authority believes you have deliberately reduced your assets to avoid paying care costs – a practice known as deprivation of assets – they can treat you as if you still own the property. This means they’ll calculate your fees based on the home’s value, even if you no longer hold the title deeds. There is no set time limit for this rule: even gifts made years ago can be challenged if it’s deemed that care was a foreseeable need at the time.
Other risky tactics include sudden, unusual spending sprees, transferring assets into inflexible trusts, or buying high-value items to reduce your savings. These actions can all be flagged as deprivation, leaving you with fewer resources and still liable for full care costs.
How Your Will Can Help – The Role of Property Trusts
A standard will alone won’t protect your home from care fees, as it only takes effect after your death. However, structuring your will to include a property trust – such as a life interest trust – can be an effective way to safeguard at least part of your home for your heirs.
Most couples own their home as joint tenants, meaning the surviving partner automatically inherits the entire property upon the death of the other. If the survivor later needs care, the full value of the home will be included in their financial assessment. By severing the joint tenancy to become tenants in common, each partner owns a distinct share (typically 50% each). This share can then be left in a trust in your will, rather than passing directly to your partner.
The surviving partner is granted a life interest in the trust’s share of the property, meaning they can live there rent-free for the rest of their life. Crucially, the trust’s share is not counted in the local authority’s financial assessment if the survivor needs care – only their own 50% share is considered. If the home is sold, the trust’s portion is protected and passed on to your chosen beneficiaries (such as children), while the survivor’s share can be used to fund care or invest for their needs.
It’s important to note that this strategy has limitations: if both partners need care at the same time, both shares of the property will be included in their assessments. There are also administrative responsibilities for trustees, such as managing investments if the home is sold and reporting income to HMRC.
Other Legitimate Ways to Protect Your Home
Lifetime Trusts
In some cases, a lifetime trust (set up during your lifetime rather than through your will) can offer additional protection. These trusts must be carefully structured to comply with care fee rules, and you should retain no direct control over the assets – otherwise, they may still be counted in assessments. Lifetime trusts can be useful if you’re unmarried, have no partner living with you, or want to protect assets for vulnerable beneficiaries.
Lasting Powers of Attorney (LPAs)
While not a direct way to protect your home, LPAs are essential for ensuring your financial affairs are managed by someone you trust if you lose mental capacity. An LPA for property and financial affairs allows your attorney to make decisions about your home – such as renting it out to generate income for care, or selling it in line with your wishes – without the need for costly court proceedings.
Deferred Payment Agreements
If you’re eligible for local authority care but want to keep your home, you may be able to arrange a deferred payment agreement. This allows the council to cover your care costs upfront, with the debt repaid from the sale of your home when you die or move out. It ensures you can access care without selling your property immediately, and your heirs will receive any remaining equity after the debt is settled.
NHS Continuing Healthcare (CHC)
In some cases, the NHS will fund full care costs if your needs are primarily health-based rather than social care. CHC is not means-tested, so your home and assets won’t be taken into account. While assessments for CHC can be complex, it’s worth exploring if you or your loved one has significant medical needs.
The Importance of Early Planning
The key to effective care fee planning is to act early. Waiting until care is needed or until you lose capacity will limit your options – many strategies require years to implement and be deemed legitimate by local authorities. It’s also vital to seek professional advice from a solicitor specialising in elder law or estate planning, and ideally an independent financial adviser with expertise in care funding. They can help you tailor a plan to your circumstances, ensure compliance with all rules, and avoid costly mistakes that could leave your home at risk.
Conclusion
Protecting your home from care home fees requires careful thought, an understanding of the rules, and often professional guidance. While there are no guarantees, structuring your will with a property trust, setting up LPAs, and exploring options like deferred payment agreements can help you balance the need to fund care with the desire to pass on your legacy. By planning ahead and avoiding risky tactics like gifting assets, you can ensure your home remains a source of security for you and your family for years to come.
Would you like help finding a qualified solicitor or financial adviser specialising in care fee planning in your area?
Would you like help finding a qualified solicitor or financial adviser specialising in care fee planning in your area?
