Care Home Fees

Protecting your home from care home fees

What is the problem?

•    With our ageing 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. It can be dealt with.

•    Average care home fees cost £30,000 p.a. in 2008 (source: Age Concern).

•    “70,000 people were forced to sell their homes last year to pay for care costs alone” (source: The Guardian, 17^th 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.

Once Social Services has decided you need care, you will be referred to your Local Authority who will arrange a suitable placing and 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 (2011/12 thresholds), when only the last £14,250 of your capital is safe. Out of this sum, a lot of people then have to pay for their 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 (2011/12 tax year), then this ‘Care Costs tax’ is effectively 100% above the £14,250 threshold. 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…

Transferring your house and savings into a Family Protection Trust can protect them from this happening but we will need to assess your own personal situation very carefully to make sure this is suitable. Please contact us to arrange an initial discuss.

Our aim is to ensure your nest egg remains protected, and that the beneficiaries of your Will actually inherit your estate rather than allowing the State to get it.

All the alternative options are less effective for different reasons:

1. Do nothing and hope that you won’t need care in the future. •    This leaves a lot to chance but it is an option.  Savings on a Trust arrangement fee may prove to be a false economy as you leave yourself open to crippling costs later in life.
2. Give your assets to your family now, but with consequences, beware! You could leave your loved ones open to substantial Capital Gains tax bills.  They may also lose any benefiots to which they are currentyl entitled or you could be vulnerable to family fall-out, divorce or even banmkruptcy of a loved one.
3. Purchase an annuity plan to pay the fees as they fall due, but the policy 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.
4. Include trust clauses in your Wills that set up a ‘life interest’ in the deceased’s share will only protect that half, what about the other half though?
   •     A cost effective and proven solution but only guarantees protection for the assets placed in the trust on first death, leaving the survivors share at risk.

What are the benefits to you?

Quite a few actually. With us, it will always save you money by avoiding Probate Fees that would otherwise be paid on your death (e.g. £250,000 estate x 3% fees = £7,500 avoided) because the bulk of your assets (which are in the trust) can be distributed quickly and easily by the trustees according to the terms of your Will. A Trust does not pay Probate Costs, only the deceased’s estate will. This also avoids the time delays and hassle usually experienced with the Probate process. Your trustees could retain some (or all) of your estate in the trust (at their discretion) if for instance your son/daughter is getting divorced, gambles or is on drugs. A trust cannot be contested whereas a Will can under the 1975 Inheritance (Provisions for Family & Dependents) Act.

So it can save money overall and help to safeguard your assets. It ticks all the boxes.

Go to the page ‘In retirement’ for more information