How to fund nursing home care for mum if no family assets are in her name?

Q&A: Dominic Coyle answers your personal finance questions

How  pay for nursing home for  mum? Photograph: iStock

How pay for nursing home for mum? Photograph: iStock

 

Both my parents are in their mid-70s, retired and unfortunately in poor health. My father has recently been diagnosed with a terminal illness; my mother had a stroke many years ago and requires home care.

She has HSE carers calling for three hours a day and my parents were able to manage, but now my father is no longer able to help and offer my mother additional care.

He has his affairs in order and informs me that he has willed me the property and has divided his savings and investments between his siblings. Also my mother has no bank account or savings in her name, only her State pension.

Will the nursing home Fair Deal scheme still want to take into account the property value and my father’s savings and personal bank account, even though it is no longer his to give as he has already willed it to his family?

Can the HSE still come after the property after my father dies?

Mr JL, email

Age can raise some very difficult issues for couples. In this case, your mother has clearly struggled with her health from a relatively early age and, as in many families, your father has been doing most of the heavy lifting in the role of carer.

The homecare hours provided by the Health Service Executive are clearly welcome in as far as they go, but as your mother is incapable of independent living and your father now has his own very tough health issues to try to manage, they will not go far enough to provide adequately for her.

It is worth applying to the HSE for extra homecare hours but that service is very stretched despite repeated Government promises and protestations. That means a move into nursing home care that will likely prove more expensive for the State will be required

There are a few issues here in how your father is arranging his affairs and what that might mean for your mother and, separately, for the financing of her care should she need to move into a nursing home as seems likely to be the case.

Handling them in that order, your father’s will – as he has outlined it to you – makes provision for you and for his brothers and sisters. Strikingly, it makes no provision for your mother.

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Legal right share

That won’t wash. Spouses have an automatic entitlement to a certain share of each other’s assets on death, regardless of what a will might say or whether there is a will at all.

This is called the legal right share and it states that, where there are children, as in this case, the surviving spouse is entitled to one-third of the estate of the deceased. If there had been no children, she would be entitled to a half of the estate.

One thing worth noting is that the spouse does have to formally elect to claim the legal right share. Whoever is handling your father’s estate after his death would have the obligation to formally notify her (or her representatives) in writing of her entitlement. She would then have six months to claim it (or 12 months after he died, whichever is the later).

If she is not in a position to make that conscious election, someone representing her under power of attorney can do so, or otherwise it will be decided by the courts under ward of court procedures.

So it is technically possible for her to pass on her legal right share, but it would be very unusual – and anyone making that decision on her behalf would have to be able to show it was in her interest.

Family home

That’s the first thing. Turning to the issue of assets, I am assuming there is a family home. I understand the intention is that your mother will have to move into a nursing home while your father is still alive but no longer able to provide the care she requires, but even in the event of his death, it is still the family home of the couple.

Under the Family Home Protection Act 1976, as I understand it, even if the family home is only in his name, he cannot sell or otherwise transfer it to another person without her express permission. In other words, he cannot make her homeless.

So if your father is alive when your mother applies for Fair Deal, the HSE scheme to help people fund nursing home care – or an application is made on her behalf – her financial contribution will be assessed on half the family income and half the assets, including the house. If your father has already died, as I understand it, your mother will still be in possession of the house.

If your mother goes into nursing home care, under Fair Deal the HSE will have a charge on the house for the first three years of her care. Assuming your father is still alive, the charge will be 3.75 per cent per annum. If not, the percentage charge rises to 7.5 per cent for those years where he is not alive.

In terms of the overall cost of her care under Fair Deal, this charge will be in addition to a similar annual levy on family savings and 40 per cent of the family income (a figure that would rise to 80 per cent of her income – ie, the State pension – in the event of your father’s death).

When your mother dies, if your father is already dead, the HSE will seek payment within 12 months of the “nursing home loan” secured as a charge against the family home. If your father is still alive, he can seek to have repayment deferred until he dies. But, at that stage, the loan must be repaid within 12 months of his death.

The fact that he has willed the property will not avoid the requirement to pay the bill levied against it.

Savings

The same is true for the annual charge under the Fair Deal arrangement on those savings that he intends passing to his siblings on his death – at least as long as he is alive. Where your father is still alive, the first €72,000 of savings is exempt with an annual charge of 3.75 per cent against the balance.

If he has died, only the first €36,000 of whatever assets outside the family home that your mother retains under her legal right share will be relevant but they will be subject to an annual charge is 7.5 per cent. So there will be no clawback on savings willed by your father after his death but they will be considered for the purpose of your mother’s Fair Deal financial contribution until that point.

The fact that the savings are destined for people other than your mother under the will is irrelevant until he dies.

There is no three-year limit for the charge against assets and savings outside the family home. That charge will be levied annually for as long as she is availing of Fair Deal. To reflect the changed circumstances, it would make sense to seek a financial review after your father dies, assuming he predeceases her.

Giving those savings and investments away before he dies – and before your mother enters a nursing home – will be counterproductive if your mum has to go into nursing home care within five years. Under Fair Deal, the HSE operates a clawback arrangement and will simply assume they remain in the family’s control for the purpose of assessing the charge on her care.

Finally, after the first three years, if your mother has no assets outside the house, she will be charged 80 per cent of her State pension and the HSE will have to bear the rest of the cost.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice. No personal correspondence will be entered into

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