Maureen and her husband are thinking of releasing some cash from their home through equity release and write to ask:
“How is the capital that’s released treated if one is admitted to a care home? Would it be added to savings and reduce the help given?”
The short answer, Maureen, is “yes”. Once capital exceeds a certain amount, means-tested benefits such as pension credit and council tax reduction are reduced, sometimes to nothing. The same is true of help with care home costs, which is not available to people with capital — that means savings, investments, and property you do not live in — above certain limits.
In England and Northern Ireland that is £23,250. It is £40,000 in Wales and £27,250 in Scotland. But note that these amounts may change in April.
The capital taken from equity release would count as capital in the bank or invested.
That is why equity release is not for everyone. Only ever consider advice from a firm that is a member of the Equity Release Council. They will explain the pros and cons without commitment.
Email your questions to firstname.lastname@example.org Paul cannot answer your questions personally but will reflect them in this column.