Probate and Care Home Fees: What Executors Need to Know

Care home fees are one of the more complicated debts an executor may encounter. They are often large, sometimes disputed, and can be complicated by local authority funding arrangements, deferred payment agreements, or questions about whether the deceased was eligible for NHS funding that was never properly assessed. Understanding the rules before you distribute the estate can save you from significant personal liability and, in some cases, can recover money for the estate that would otherwise be lost.

Care home fees as an estate debt

Any outstanding care home fees at the date of death are a debt of the estate and must be settled before anything is distributed to beneficiaries. This applies whether the deceased was self-funding their care or receiving local authority support.

The distinction between self-funded and local authority-funded residents matters for how fees are calculated. Self-funders pay the care home's published rates, which are often higher than the rates local authorities negotiate. Local authority-funded residents have their care costs met by the council, subject to a means test - but the local authority will want to recover its costs from the estate if the person's assets were not fully accounted for during their lifetime, or if there is a deferred payment agreement in place.

As executor, request a full breakdown of any outstanding balance from the care home before paying. Care homes are businesses and, while most operate straightforwardly, billing errors do occur. Ask for an itemised statement covering the period from the last payment to the date of death and check it against any payment records you can find.

Deferred payment agreements

A deferred payment agreement (DPA) is an arrangement between a local authority and a care home resident, allowing the resident to defer paying care fees until after their death. The local authority takes a legal charge over the person's property - typically their home - as security for the deferred amount. When the person dies, the charge must be repaid before the property can be sold or transferred to beneficiaries.

As executor, you need to identify early whether a DPA exists. Check the deceased's paperwork for any agreement with the local authority, and ask the care home or the relevant council directly. The Land Registry entry for any property owned will also show whether there is a charge registered against it - you can get an official copy of the register for a few pounds.

The local authority will calculate the total owed, including any interest accrued during the deferral period. This is repaid from the proceeds of the property sale. Our guide to selling property during probate explains how property sales work within the administration process.

NHS Continuing Healthcare - a potential claim for the estate

NHS Continuing Healthcare (CHC) is fully-funded NHS care for people whose primary need is a health need, as opposed to a social care need. It is assessed by the NHS clinical commissioning group (now integrated care board) and, if the person qualifies, the NHS pays the full cost of their care - including accommodation - rather than the individual or their family.

Many people who were eligible for CHC were never properly assessed during their lifetime. If the deceased was in a care home and was not receiving CHC funding, but had complex health needs, there may be grounds for a retrospective CHC assessment. A successful retrospective claim can result in the NHS reimbursing care fees paid by the individual - potentially a very significant sum.

Retrospective CHC assessments can be requested within 12 months of the decision not to fund - or, if no formal decision was made, within 12 months of the death in some circumstances. The process is managed through the NHS integrated care board for the area where the person received care. It is worth taking specialist advice on this if there is any indication the person had significant healthcare needs during their time in residential care.

Gifting assets to avoid care fees - and the risks for executors

Some people give away assets during their lifetime in an attempt to reduce what is counted towards care fee means-testing. Local authorities have powers to investigate whether assets were given away to deliberately avoid care fees - a concept known as "deliberate deprivation".

If the local authority decides that assets were deliberately deprived, they can treat the person as still owning those assets for means-testing purposes and charge accordingly. This can result in outstanding care fee liability attaching to the estate even though the assets themselves have been given away. As executor, this means you may face a care fee debt that the estate cannot cover from its remaining assets.

If you suspect this may apply, or if the local authority raises a deliberate deprivation argument during the administration, take legal advice before responding. The rules in this area involve significant sums and are contested territory.

If the estate genuinely cannot cover the outstanding care home fees - because the deceased had few assets and no deferred payment agreement - the care home or local authority generally cannot recover the shortfall from the beneficiaries personally. Beneficiaries do not inherit the deceased's debts. However, an executor who distributes the estate before settling confirmed debts can be personally liable. When in doubt, settle debts first. See our guide to executor personal liability for more detail.