The issue of care home fees is something many more of us will have to deal with as we live longer and potentially become susceptible to age-related health issues.
The costs of residential care can be huge. The potential of having to find several thousand pounds each month to pay for care leads many to consign the issue to the box marked: ‘Something to think about another day.’
There are no easy answers and there is no magic formula that is guaranteed to keep your assets intact should you need residential care but if you don’t make plans, the financial assets you’ve spent your life accumulating will be at greater risk. Life can also become very complicated for your family.
The earlier you start planning the less likely anyone looking from the outside can argue that any measures you have put in place had the specific purpose of hiding assets when assessing liability for care costs.
What are the rules?
If you have assets – including your home – worth more than around £23,000 (the threshold is reviewed regularly) you will be deemed to be self-funded. In other words, it’s up to you to fund your own care. There are some exceptions to this if, for example, you have a continuing physical or mental health need assessed by the NHS. Additionally, if your spouse continues to live in the home it should not be considered in the assessment.
If you own your home and/or have significant savings, it’s wise to assume that the local authority will not be paying for your care. In most cases the cost of the care you receive will be recovered from your estate so the implications for surviving relatives and beneficiaries could be significant.
What can you do?
What you shouldn’t do is simply give away your assets; for example, by signing your property over to grown up children. You then lose the security of owning your home and could expose your children to Capital Gains Tax liabilities. Also, it probably won’t work as a way of avoiding care fees.
Selling or renting out your home is one way to cover your fees. However, this may not be suitable if you have a spouse or partner. There are several additional considerations for couples that we cover in a separate article.
Your assets can be used to pay for care, either as equity release, or to buy and Immediate Care Plan, which is a tax-free annuity you can use to pay some or all of your fees. Again, these aren’t always suitable depending on your circumstances and getting expert advice is essential.
There are options to consider and we strongly advise that everyone should have a plan that specifies how their care fees would be funded and which seeks to limit the impact on your assets. The plan should be reflected in the Wills of yourself and your partner and should be reviewed every few years, as the regulations change frequently.
If you are starting to think about the future come and have a chat with the friendly team at PowellsLaw. Our experienced team can help you plan for the future in the most effective way that suits you. Contact us today on 01934 623501 or visit our website.
