What is the 7 year rule for care home fees?

DebuDebunking the 7-Year Rule Myth for Care Home Fees

There is a common misconception regarding care home fees known as the "7-year rule." Many individuals believe that if they transfer assets, such as money or property, at least seven years before entering a care home, these assets won't be considered in the financial assessment. However, this belief is not accurate, and the 7-year rule is a myth.

In reality, there is no specific time limit for the deprivation of assets, meaning that any past disposal of assets can potentially be scrutinized by the local authority. However, several key factors come into play:

• Evidence and Motive: To assess whether assets were intentionally disposed of to avoid care home fees, the local authority must provide evidence of motive. They will consider whether the asset transfer had a substantial impact on the individual's capital, typically measured against the capital limit, which is £23,250 in England.

• Intention Matters: The most critical factor in this evaluation is the individual's intention. If, at the time of transferring assets, it was reasonable to expect the need for care and support in the future, the motive may be deemed as deprivation of assets. For instance, if a needs assessment determines the need for residential care and an individual subsequently transfers property to a family member for a minimal fee, significantly reducing their capital, it could be grounds for asset deprivation.

• Notional Capital: If asset deprivation is established, the value of the transferred property will still be considered in the financial assessment. This is referred to as notional capital and can impact the individual's eligibility for financial support in a care home.

The "7-year rule" for care home fees is a common misconception.

There is no fixed time limit for asset transfers to be disregarded in financial assessments.

Instead, local authorities consider factors such as motive, intention, and the impact on an individual's capital when assessing potential asset deprivation. It is crucial to seek professional advice and plan carefully to ensure that your financial decisions align with your long-term care needs while adhering to relevant regulations.