Care Home Fees
Can you protect your home from care home fees that is the big question?
With our aging population it is expected that as many as 1 in 2 of us in the near future (source: Help the Aged) will need to go into care. It is a real problem and it is turning into a reality.
- Average care home fees cost 30,000 p.a. in 2008 (source: Age Concern) so now we are in 2013 …
- “70,000 people were forced to sell their homes last year to pay for care costs alone” (source: The Guardian, 17th November 2007).
- Two thirds of 45-65 year olds have made no financial plans to pay for long-term care, or to protect their assets.
The Kings Fund/ Nuffield Trust report reveals the truth:
- 26% fewer elderly infirm receive any local authority funded help that 6 years ago
- Fees local authorities pay to care homes have either reduced or not kept pace with inflation in most instances
- Care and support is often dependent upon where a person lives and what financial resources they have, rather than that persons individual needs
- There is insufficient funding for NHS primary or community care, placing more responsibility on local authorities
- 90% of care support is provided by over 19,000 organizations in the private or voluntary sector
- Local authority spending on care is overall 11% less and 25% fewer people receive state funded care than 6 years ago
- In 2009 1.1 million people were receiving local authority funded care. In the year 2013/14 that figure had dropped to 853,615
- One local authority was reported as believing the targets on cut backs would mean local authorities needing to breach their responsibilities under the Care Act 2014
- Self-funders in care, subsidise local authority funded residents in the same home who receive the same quality of care at lower prices
- Local authorities try to maximise top up payments from families to keep local authority costs down
- Complaints about adult social to the Local Government Ombudsman are up by 18% from 2003, with 55% of complaints upheld
- Complaints about care homes have increased by 29% since 2013 with 67% upheld.
Fighting for care and support may be more necessary now, than ever before.
Once Social Services have decided you need care, you will be referred to your Local Authority who will arrange a suitable placing and begin to pay for it. They will then set about reviewing your financial situation and if you have capital (including your house) the Local Authority will make you pay your own way until it runs down to 23,250 and only then will you begin to pay at a reduced rate until it drops down further to 14,250, when only the last 14,250 of your capital is safe. Out of this sum, a lot of people will then have to pay for the funeral leaving beneficiaries a long way short of their intended inheritance.
If you think Inheritance Tax is devastating at 40% above the 325,000 threshold (to April 2019), then this Care Costs tax is effectively 100% above the 14,250 threshold because that is potentially what could be lost. Even Tony Blair in 1997 said that this was not fair and all of our clients certainly agree with him. Please don’t just leave it, get in touch with us today, it costs nothing to inquire…
What can you do about it?
Understanding the Government rule book is a good start. Knowing when your assets become vulnerable is clearly helpful. Our underlying message is to carry out estate planning and manage the transition of your family money whilst you are fit and well, and we would typically recommend this begins at retirement age.
We suggest you ask us to assess your own personal situation very carefully to make a recommendation so please contact us to arrange this.
Our aim is to ensure your nest egg remains in tact, and that the beneficiaries of your Will actually inherit your estate rather than allowing the State to take some/all of it.
You are able to safeguard your own share of the estate in the event your spouse/partner goes into care. In certain situations the family home may be disregarded from a care fees means test, the same applies to some types of investments. We can help you so please get in touch contact us now.
Here are some of the wrong things you can do that we regularly come across
- Do nothing and hope that you won’t need care in the future. This leaves a lot to chance but it is an option. We recommend you take our advice and look at your options do nothing and if it happens, there is certainty, you will lose money.
- Give your assets to your family now, but this comes with its own consequences so beware! You could leave your loved ones open to substantial Capital Gains tax bills in the future, they may lose any entitlement to benefits to which they currently receive or you could experience a family fall-out, divorce or even bankruptcy of a loved one. The money will have gone.
- Purchase an annuity plan to pay the care fees as they fall due, but don’t forget the policy (and money) will vanish on death. It does mean spending tens of thousands of pounds upfront in return for an income for life, which could be wasted if you die within a few months, but you may be able to insure against this. Speak to a Financial Adviser for further details as this option is regulated by the FSA. Ask us to recommend a good one.
- Including trust clauses in your Wills. This is a cost effective and proven solution but only guarantees protection for the assets placed in the trust on first death, so this will potentially leave the survivor’s share of the estate at risk. Also, if both of a couple have gone into care, nobody will have died yet, so the Will Trusts won’t have been set up yet!
We can help to safeguard your money/assets
As we have already said, this will need a couple of hours of your time to explain, so contact us now to arrange this.
Go to the page In retirement for more information