The Pitfalls of Care Home Costs — and How to Deal with Them

As the population ages, more people are facing the difficult decision of moving into a care home. This can be a stressful time for families, not only emotionally but financially. Care home fees can be substantial, and navigating the system is complex. Without proper estate planning, individuals and their families may be caught off guard by unexpected costs, misunderstandings about funding eligibility, or even the loss of valuable assets. Understanding the pitfalls of care home costs—and how to manage them—is essential for protecting your financial future.

The Rising Cost of Care

Care home fees vary significantly depending on location and level of care needed. On average, residential care costs over £40,000 per year, while nursing care—where medical assistance is provided—can exceed £55,000 annually. These costs are often higher in the South of England, with London and the Home Counties seeing figures closer to £60,000–£70,000 for high-dependency care.

These figures are daunting, especially for individuals with modest savings. Many assume the NHS or local authority will cover the costs, but this is only true in specific circumstances. If you have assets above the means-tested threshold, currently £23,250 in England (slightly different in Wales, Scotland, and Northern Ireland), you may be expected to fund your care yourself.

Pitfall 1: Misunderstanding Funding Eligibility

One of the most common pitfalls is assuming that care will automatically be funded by the state. In reality, only those with very limited means are eligible for local authority support. Even if your assets fall below the threshold, you must undergo a financial assessment—and this process can be confusing and stressful.

The system is also different for NHS Continuing Healthcare (CHC), which is entirely funded by the NHS for those with complex medical needs. However, qualifying is notoriously difficult, with strict and subjective criteria. Many applicants are initially refused.

Solution: Start by understanding the different types of care funding: local authority support, CHC, and personal contributions. Seek a professional estate planning advisor with experience in elder care to assess your options and help you through the maze of eligibility rules.

Pitfall 2: Selling the Family Home Too Soon

Some families rush to sell the family home to cover care fees, fearing the property will otherwise be taken by the council. However, this isn’t always necessary. If a spouse or dependent still lives in the home, it is disregarded in the financial assessment. Similarly, some individuals qualify for a deferred payment scheme, allowing care fees to be paid from the deceased’s estate after death.

Solution: Don’t sell the home before getting independent advice. There may be options to protect the home or delay payments. Discuss with a sympathetic planner who specialises in elderly care and estate planning.

Pitfall 3: Gifting Assets Without Realising the Rules

Many people try to reduce their assets by gifting money or property to children or blended family members to fall below the threshold for care support. However, local authorities can investigate any significant gifts made in the years prior to care home entry and classify them as “deliberate deprivation of assets.” If they conclude the gift was made to avoid care fees, they can still treat the assets as part of your wealth.

Solution: Gifting should always be done cautiously and with legal advice. Consider alternatives such as setting up a family trust or using legitimate estate planning assistance to protect your assets while staying within the law.

Pitfall 4: Not Considering Long-Term Impact on Inheritance

Care costs can rapidly erode an estate that was meant to be passed on to children, grandchildren, or other members of a blended family. For many, this is a heartbreaking outcome. Without forward planning, years of savings or property equity can be depleted in just a few years of care.

Solution: Estate planning is key. A carefully structured will, family trust, or lifetime gift strategy can help preserve more of your estate for future generations. It’s best to begin planning while still healthy and well, ideally in your 40s to 60s.

Pitfall 5: Lack of Information and Advice

Many people are unaware of what support is available, or only seek help when it’s too late. The current care system is fragmented and navigating it without guidance can lead to poor decisions.

Solution: Take proactive steps. Consult an experienced advisor, elder law solicitor, or seek out organisations such as Age UK, Citizens Advice, or the Society of Later Life Advisers (SOLLA) for guidance. Independent financial advice can pay for itself many times over by identifying funding routes and avoiding costly mistakes.

Planning for care home costs requires early, informed decision-making. Without preparation, families may find themselves facing high fees, asset loss, and bureaucratic frustration. But by understanding the rules, seeking experienced advice, and exploring available support schemes, you can mitigate these risks and make the best possible choices for your loved ones and your legacy.