Protecting Your Assets From Care Fees

Few later-life worries are as emotionally charged as the fear of losing a lifetime’s savings, or the family home, to care fees. It is a fear the internet is happy to exploit, with schemes promising to make your assets vanish from the council’s reckoning. Some of these are legitimate planning; many are expensive traps that fall apart the moment they are tested.

This guide draws a clear line between the two. It explains how the care means test actually works, which assets are already protected, what the deliberate deprivation of assets rules catch, and the genuine, lawful steps that can help. Getting this right protects your family; getting it wrong can leave you worse off than doing nothing. It is information, not personal advice, decisions this important deserve a regulated adviser and, often, a solicitor too.

How the means test works

When you approach a local authority for help with care costs in England, it carries out a financial assessment: the means test. It looks at your capital (savings, investments and, in some cases, property) and your income. In 2026 the thresholds are unchanged and stark: if your assessed capital is above £23,250, you are a full self-funder and pay your own way. Below £14,250, your capital is ignored and you contribute only from income. Between the two, you pay a tariff of £1 a week for every £250 of capital in that band.

These numbers matter because the long-promised £86,000 cap on lifetime care costs was cancelled in 2024 and does not exist in 2026. That means there is currently no ceiling on how much someone can pay for care over their lifetime, which is precisely why so many families look at ways to protect what they have. The means test also probes whether you have deliberately reduced your assets, and that is where good intentions often meet hard rules.

It is worth stressing that these figures apply in England. Scotland, Wales and Northern Ireland run their own systems with different thresholds, and Scotland provides free personal and nursing care for those assessed as needing it. Your income, pensions, most benefits and any annuity payments, is assessed separately from capital and is largely expected to go towards fees, though you keep a modest personal expenses allowance. Understanding both halves of the test, capital and income, is the real starting point for any sensible planning.

What is already protected

Before considering any planning, it is worth knowing how much is protected automatically, because it is often more than people fear. The family home, the single largest asset for most, is disregarded entirely while a spouse, civil partner or unmarried partner still lives in it. The same disregard applies if the resident is a relative aged 60 or over, a child under 16 you are responsible for, or a relative who is disabled. In those cases the home never enters the means test at all.

Certain other assets sit outside the test too: the surrender value of most life insurance policies, personal possessions (unless bought to shelter money), and importantly, the capital value of your pensions and annuities, which are assessed as income rather than capital. There is also a 12-week property disregard when someone first enters residential care, giving families breathing space before the home is counted. Knowing what is already safe stops people rushing into risky schemes to protect assets that were never at risk.

The personal-possessions disregard has limits, though. Everyday belongings and a reasonable car are ignored, but converting countable cash into, say, a valuable painting purely to shrink your assessed capital would itself risk being treated as deliberate deprivation. As so often in this area, the test is not what an asset is but why you came to own, or dispose of, it.

The deliberate deprivation trap

This is the rule that undoes most DIY schemes. If a local authority believes you have deliberately deprived yourself of an asset, given it away, sold it cheaply, or spent it unusually, in order to reduce your care fees, it can carry out a notional capital assessment and treat you as though you still owned it. You then pay as if the money were still there, but without the money to pay with.

The council weighs two things: your intention (was avoiding care fees a significant reason?) and timing (was care already a reasonable prospect when you acted?). Crucially, there is no fixed look-back period. The seven-year rule people quote belongs to inheritance tax, not care fees. A gift made ten years before any hint of ill health is unlikely to be challenged; the same gift made shortly after a dementia diagnosis almost certainly will be.

Schemes that usually fail

A cottage industry has grown up selling asset-protection products, often at high cost, that promise to shield the family home. Approach them with caution.

The pattern is consistent: schemes that rely on making assets disappear tend to fail, while planning that works within the rules, and is done early, for genuine reasons, tends to hold up.

What legitimately helps

There are lawful, sensible steps that can protect assets without inviting a deprivation challenge. For couples, a well-drafted will can leave each partner’s share of the home to a property trust on the first death, so that if the survivor later needs care, only their own half is in scope, the deceased’s half is ring-fenced for children. This is a mainstream planning tool, quite different from the dubious lifetime trusts sold to the healthy.

Other legitimate measures include buying a care fee annuity to cap the cost with certainty, taking out an immediate needs plan, or simply making full use of the disregards and benefits already available. Sensible estate planning undertaken years ahead, for ordinary inheritance reasons, when care is not in prospect, is far more robust than anything attempted once care looks likely. The golden rule is that genuine, early planning survives scrutiny; last-minute manoeuvres rarely do.

It is also perfectly legitimate to spend your own money on your own life, home improvements, a long-postponed holiday, clearing a mortgage or helping family in the ordinary course of events. Difficulty only arises when spending or gifting is unusual in scale or timing and coincides with a foreseeable care need. Keeping a clear record of why each decision was made, ideally with professional advice noted at the time, is the best protection you can have if a local authority ever asks questions years later.

Planning as a couple

Married couples and civil partners have options that single people do not, because the home is protected while one of them still lives there. This buys time and makes trust-based will planning genuinely effective. It also means that when only one partner needs residential care, the other is not forced to sell the home from under themselves, a fear that causes enormous and often needless distress.

Coordinating powers of attorney, wills and the ownership structure of the home (tenants in common rather than joint tenants, for instance) lets a couple plan as a unit. This overlaps with broader wealth management, and is best done with a solicitor and adviser working together. Any investments involved can fall as well as rise, and none of this removes the need for care itself to be paid for, it simply shapes who bears the cost.

One practical foundation is how the home is legally owned. Couples who own as joint tenants automatically pass the whole property to the survivor, which can leave all of it exposed to a later means test. Switching to tenants in common, so that each owns a distinct half, is what allows a will to direct one share into a protective trust on the first death. It is a straightforward change a solicitor can make in an afternoon, and it quietly underpins much of the legitimate planning described above.

Getting proper advice

Because the pitfalls are legal as well as financial, this is an area where paying for good advice usually pays for itself. A regulated financial adviser can model the funding side and arrange products such as care fee annuities; a solicitor drafts the wills and trusts that make protection lawful and durable.

• 1

  Understand the means test first

  Know the £23,250 and £14,250 thresholds and how your assets are counted before considering any planning.

• 2

  Map what is already protected

  The family home while a partner lives there, pensions, and life policies may already be safe.

• 3

  Avoid the deprivation trap

  Never give away assets to dodge care fees, intention and foreseeability, not timing, decide the outcome.

• 4

  Use recognised structures

  Property trusts in wills and specialist annuities are lawful tools; seminar “asset protection” schemes often are not.

• 5

  Plan early, and take joined-up advice

  A solicitor and a regulated adviser together give planning that stands up to scrutiny.

Vetted Wealth is a free service matching you with an independently vetted, FCA-regulated adviser who can plan care funding properly, and point you to the right legal support. The guides below go deeper into the options.

Common questions on later-life care