Consider Separate Bank Accounts When Planning for Care Fees

When planning for potential care fees, many couples overlook an important aspect of their finances: joint bank accounts and jointly held investments.

For most couples, sharing finances is entirely normal.  However, when one partner requires care and is assessed for local authority support, joint finances can sometimes create unintended consequences.

Why Joint Accounts Can Be an Issue

If your spouse or partner requires care but continues living at home, the local authority will generally carry out a means test to determine what contribution they should make towards the cost of that care.

While local authorities typically only take account of 50% of funds held in a joint bank account, problems can arise if household finances are not clearly separated.

For example, one partner may have a higher income and naturally pay a greater share of household bills, or all household expenses may simply be paid from a joint account without much thought.  In these situations, the partner needing care may effectively retain more of their own money because the healthier spouse is subsidising day-to-day living costs.

This can result in the person receiving care preserving capital that might otherwise have been used to contribute towards their care costs.

Consider Separating Finances

One option worth considering is establishing separate bank accounts and separating jointly held cash savings and investments wherever practical.

The objective is not to make life more complicated, but to create a clear financial distinction between each partner's assets and spending.

A practical approach could be:

• Each partner maintains their own personal account.
• A separate household bills account is established.
• Both partners contribute equally, or in an agreed proportion, towards household running costs.
• Household expenses such as utilities, council tax, insurance and general living costs are paid from the joint bills account.

This helps demonstrate that both individuals are contributing towards the normal costs of maintaining the home.

Why This May Help

If the partner requiring care is living at home, they should ordinarily contribute towards the household expenses they benefit from, just as the other partner does.

Where finances are clearly separated, it becomes easier to show how much each person owns and spends.  This can prevent situations where one partner unintentionally subsidises the other's living costs.

Over time, this may mean that the partner requiring care uses their own capital at the rate intended by the means-testing system.  As a result, they may reach the relevant local authority capital thresholds sooner, at which point increased support with care costs may become available.

A Sensible Planning Consideration

Separating finances is not always convenient, and it may feel unnecessary for couples who have shared their finances for many years.  However, when care needs arise, having clear ownership of assets and a transparent contribution towards household expenses can be beneficial.

If care fees could become an issue in the future, it may be worth reviewing how your accounts, savings and investments are structured and whether greater separation would help support future means-testing assessments.

Key Takeaway

Consider separating bank accounts, savings and investments so that each partner's assets are clearly identifiable.  Ensure both individuals contribute appropriately towards household expenses.  Clear financial boundaries can make care fee assessments simpler and may help ensure the means-testing process reflects each person's true financial position.

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