CHANGES TO FAIR DEAL SCHEME TO ENHANCE PROTECTION FOR FAMILY FARMS
Changes to the Nursing Home Support Scheme (Amendment) Act 2021 will come into effect on the 20th of October 2021.
Big Change to Scheme.
The biggest change relates to capping the contribution applied to the the family farm or business to 3 years. This means that after a period of 3 years the value of the family farm will no longer be taken into consideration when calculating the cost of a person’s nursing home care. This is good news for families who wish to keep the family farm going while at the same time availing of the scheme.
BUT as always, there is a catch –
• this will happen only where a family successor commits to working on the farm or in the business for a period of six years. Something that may not necessarily be in place for a lot of elderly business owners and farmers who are very often reluctant to plan for their nursing home care.
Successor to Business
If the business owner had a successor, that successor surely would have been appointed prior to the last minute when the owner is going into a nursing home. But, if the business owner hasn’t appointed a successor by the time they are going into a nursing home, it is going to be hard to locate one quickly.
On the other hand, of course, the aim of the amendment is to compel succession on those who have held out to the end.
This is a method by which to force some farmer’s hands in passing farming businesses on to the next generation. While we have multiple tax incentives in this regard – young trained farmer relief, agricultural relief for interfamily farm transfers this is yet another reason to refrain from holding on indefinitely.
The other social utility about the family successor is that the amendments are designed to remove what was seen as a penalty on a successor. So, a successor could have been appointed and was running the farm but all the time in the background the farm was being charged with the 7.5% nursing home charge. This was obviously a serious dis-incentive for successors to get involved in the family business.
If there is no successor it appears that the 3 year cap will not apply. Therefore, a successor is a no brainer!
Sale of Houses now allowed
Another important change is that the 3 year cap on the family home now applies to the proceeds of sale of the family home. This is seen as being helpful to free up properties that are otherwise lying stagnant because owners want to keep them in the 3 year net. This should also serve to assist the lack of housing supply most towns and cities are experiencing.
How is the Fair deal contribution calculated
In the case of a couple, the applicant’s means are assessed as 50% of the couple’s combined income and assets. The first €36,000 of an individual’s assets, or €72,000 in the case of a couple, is not counted at all in the financial assessment.
The aim is that participants contribute to the cost of their care, according to their means, while the State pays the balance of the cost.
Where an individual’s assessed weekly contribution is greater than the cost of care, they do not qualify for financial support. Therefore, applicants with substantial assets or incomes are unlikely to qualify for financial support.
The capital value of an individual’s principal private residence is only included in the financial assessment for the scheme for the first 3 years of their time in care.
Currently, this unqualified 3-year cap does not apply to productive assets, such as farms and businesses, except in the case where a farmer or business owner suffers a sudden illness or disability and, as a result, requires nursing-home care. This is set to change now as outlined on20th October 2021.
If you have any query, contact Donal Ryan, Máire McMahon or Alison O’Mahony on the matter.