Long Term Care Planning
For most people needing long term care this will be under the overall responsibility of their Local Authority. They will provide a “needs assessment” to assess whether your needs require a move to a residential or nursing home. Then comes the “financial assessment” to assess your contribution. How the care is funded is as simple as it is unfair.
- In essence your income goes first with the council leaving you a paltry amount to pay for hairdressing or newspapers.
- Inevitably with the cost of care coming in at around £6,000 a month there is a shortfall. This will come out of your capital until it drops to £23,250. At that point the Local Authority will start to fund the care but will only take over the shortfall when your capital reaches £14,250.
So is there any way in which you can protect your assets to prevent losing everything? The first thing you can do is look at your wills.
A Will Trust
For couples they often leave all their assets to each other on first death. Assuming the gentleman goes first and the widow moves into care all the capital down to £14,250 will be taken. Instead, consider leaving the husband’s capital in a trust. This will protect the wife for the rest of her life but at the same time ring fence this capital in the event of care. This example assumes a married couple but the same will apply unmarried couples and relationships of the same sex. If you own the property jointly it is essential that you own as tenants in common and this is something we can attend to at the same time as your wills.
Lifetime Gifts
Another issue that can be looked at is gifting part or all of your property away in your lifetime. As far as the rules go this comes down to looking at the predominant reason and if the Local Authority can establish that this was for the avoidance of funding care then it will be seen as deliberate deprivation and the gift will not work. Please note the Inheritance Tax rule of seven years is irrelevant here. For this reason any arrangement must be done when you are well and not likely to need care in the near future. I would also prefer a gift into a trust rather than direct to the children so that you are protected against any later fall out with the family.
Investment Bonds
One other thing to consider is the investment of money into an Investment Bond wrapper as these are treated as disregarded capital in the event of needing care. Again you need to be careful when you invest in such a way so there can be no argument of deliberate deprivation. Here you need the advice of a good Financial Adviser.
If you would like to know more about how trusts can work for you why not come to one of my free seminars or contact me for an appointment.
