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“My mother kept one-third of our family farm in her name when it was transferred to me and I have been farming it ever since. She now needs nursing home care and I fear losing it under the Fair Deal Scheme. Can you explain how the scheme works? Whether the other two-thirds of the farm already transferred to me is at risk? How the land is valued and what if I feel the valuation is too high? Can you revise the valuation after entering the scheme? If so, how often is this allowed?”
Whether two-thirds of farm already transferred is at risk?
The financial assessment takes account of the income, cash assets and other assets of the farmer and the farmer’s spouse.
Assets include any assets transferred in the last five years. Thus, the value of any assets that the farmer may have transferred in the last five years will be taken into account when the farmer’s contribution to the cost of care is being assessed, despite the fact that the farmer no longer owns those assets nor may be entitled to an income from those assets.
Say, for example, the HSE determines that the farmer’s contribution to his/her cost of care is €600 per week, calculated by disregarding the first €36,000 of income and taking 80% of assessable income and 7.5% of the value of assets into account. However, he/she is only in receipt of an old-age pension of €238.30 per week, having transferred the farm to a child in the previous five years.
As 80% of €238.30 = €190.40, and 600-190 = 410, there is a shortfall of about €410 per week.
Unless the farmer has other land in his/her name that they can give a charge over in order to apply for the nursing home loan, he/she cannot stay in the nursing home unless he/she can make up the shortfall.
There is no obligation on the child to whom the land was transferred to make up this shortfall unless this was part of the agreement when the land was transferred, for instance if a condition of the transfer was that the child would be liable for nursing home charges for five years from the date of transfer.
If the farmer has other land, it may be possible to apply for the nursing home loan, thereby deferring a portion of the cost. This will ultimately be settled from the estate, generally within a year of the death of the farmer. Where the loan is repayable after the farmer’s death, the personal representative, for example the executor under the will, is the person responsible for repaying the loan.
A person who inherits the property or any part of it can also be held accountable for repayment of the loan. This could mean that the other land may have to be sold to pay for the deferred costs of the nursing home. So while the two-thirds already transferred is not at risk by applying for the scheme, the remaining one-third of the farm may be at risk.
As part of an application for the nursing home loan, the HSE will take a legal charge registered on the property.
The HSE must satisfy itself that the applicant farmer has an interest in the property that can be charged and the consent of any joint owner must be obtained. Evidence of title must be submitted with the application.
How land is valued and what if I disagree with the valuation?
A certificate of market value from an auctioneer or a valuer must be submitted as part of the application for the Fair Deal Scheme. Details of any mortgage or charge should be supplied.
If a person knowingly gives false or misleading information in connection with an application for State support, such as undervaluing assets or not declaring assets, he/she is guilty of an offence and is liable to a maximum fine of €5,000 or maximum three months imprisonment or both.
If there has been an overpayment of the HSE contribution based on information not being disclosed or incorrectly supplied by the farmer, then the amount of the overpayment must be repaid to the HSE and proceedings can be issued by the HSE to recoup any overpayment.
The personal representative (for instance the executor of the will) of a deceased person is legally obliged to give to the HSE a schedule specifying the value of the assets in the estate before they distribute those assets.
This will potentially reveal if the assets were undervalued at the time the Fair Deal Scheme was applied for. A personal representative who does not retain sufficient assets of the estate to repay any amount due and payable to the HSE will be held personally liable for that amount.
If you disagree with the financial assessment, you cannot request a review until 12 months have passed since the last assessment. If the HSE is aware of a material change of circumstances, then a review will be carried out.
Review or revaluation can be upwards or downwards but the HSE does not have to accept the valuation provided.
A change in circumstances could refer to a sale or transfer or the death of the farmer or the farmer’s spouse.
Under the act, there is a requirement to notify the HSE of any material change in circumstances within 10 working days of the resident becoming aware of them and that a fine of €1,000 is provided for in case of failure to comply.
In summary, the workings of the Fair Deal Scheme can be complex and farmers should ensure that they know the potential impact of applying for the scheme should the need for nursing home care arise.
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