The LA will regard this of deprivation of estate and will ignore that you own the house. Add to this that they look back more that 10 years to establish the estates value. You could apply at the time for differed care fees
Local Authority Deferred Payment Scheme for Care Fees.
One option when an elderly person enters long term residential care is to take up the Local Authority 'deferred payment scheme' whereby the care charges - over and above any personal contributions of pensions etc - accrue as a debt to the LA who take a charge on the property. The property can then be 'let' to boost (after tax) the personal contribution and thus reduce the overall debt. Where the property is the only 'home' owned by the person in care, is capital gains still payable on any gain from the time of entering residential care until the property is sold (probably on death)?
http://www.carersinherts.org.uk/article ... re-act.htm
Some of my clients have had good success with when the surviving spouse goes into a home you do a quite refurb and rent the property out. As the property is still in there name, then it is taxed as there marginal rate. The house will remain free of CGT for 36 months, read IR283 on the HMRC web site, letting relief will then kick in an cover upto Â£40,000 of further gain in the property value.
The profit from the renting goes to paying any fees, may be assisted by you or the deferred method. When the inevitable happens the bill is settled and the if you are the beneficiary, the property passes to you. At present I have 3 clients whos surviving parent has passed away and the property was remained in there estate. From memory the longest was 4 years before they passed away and the shortest was 2 yeras. Regards Peter