The cost of care has been back in the news again recently, leaving people wondering what expenses they may face as they reach old age.
Despite the changes introduced by the Care Act 2014, a joint report by the Kings Fund and the Nuffield Trust published on 15th September 2016 has revealed that as many as one million people in the UK with care needs get no support from their local authority (LA), and instead are funding their own care and relying on family and friends for the support they need to manage basic day-to-day tasks such as washing, dressing, cooking and shopping.
The cost of care can be considerable, with 1 in 10 people spending in excess of £100,000 on elderly care*. With the promised cap on care fees not due to come into effect until April 2020 at the earliest, what can you do to plan ahead for this?
LA support for care costs is means-tested and, currently, anyone with assets in excess of £14,250 (in England – different rules apply elsewhere in the UK) will have to pay some or all of the costs of their care.
Unfortunately, simply giving assets away, either outright or into so-called ‘asset protection trusts,’ is not a reliable way of reducing your exposure to care fees. Gifts can be disregarded as a ‘deliberate deprivation of assets’ upon financial assessment by the LA. Meaning, you will be treated as still owning the asset in question, if they can demonstrate that the primary motivation for making the gift was to try to avoid having to pay care fees.
On the other hand, where assets are owned jointly, (e.g. between spouses/ partners) careful planning in your Wills can serve to protect the share of the first partner to die from being used to fund the survivor’s care fees.
Also remember that nobody can force you to sell a property to fund your care fees. This is often the pragmatic solution, but before selling and spending the capital, seek independent financial advice as there may be alternative courses of action available: e.g. renting the house out to generate additional income, thus preserving your capital; purchasing a care policy; or alternatively, selling and investing the proceeds may, depending on your circumstances, generate sufficient extra income to top up your existing income to cover the costs of care.
As always, if you have any concerns or questions about this topic please do contact me.