In many if not most cases the simple answer is “no” IF certain things have been put in place correctly and at the right time.   

A recent report from the Commission on Funding of Care and Support suggested that free long-term care for the elderly was an unrealistic proposition. What does this mean for the increasing numbers of elderly people in Britain – and for their families?

If you have elderly parents or relatives and are involved in their care or decisions regarding their care, this issue is sure to affect you.

Perhaps you also have children of school age. Then you are faced with the double pressure of ageing parents and children likely to need funding through college, University and the first rungs of the housing ladder.

The baby-boomer generation are increasingly turning to property wealth to pay for care in old age. However, does this leave enough cash to live on? As the population grows and life-expectancy increases, these are questions most of us need to ask ourselves – and find serious answers to.

The same report noted increasing numbers of people renting their homes in retirement, or retiring with outstanding mortgage debt. And, of course, with fewer young people finding it possible to get on the housing ladder, there is the risk that future generations of retirees and elderly people will have access to less housing wealth than the baby-boomer generation and their parents.

Facts about long-term care for the elderly

 Did you know?

A place in a nursing home costs, on average, £36,000 per year

Yet people with assets of over £23,250 currently receive no Government assistance

Experts think 17 million of those alive today will live to be 100

It is thought that, by 2026, the care system will see a shortfall of £6billion (without reform)

Questions to ask yourself about funding long-term care

What plans are in place for your parents’ long-term care, or your own? Are you confident that you can fund your children’s education, help them onto the housing ladder and have enough cash to live on in retirement?

These are difficult questions, but can not be ignored. We urge you to talk them over with us, we can give you the best advice, help you put plans in place and significantly reduce worry and stress. Talk to us if you are facing the challenge of funding long-term care for the elderly in Kent.

If you need Long Term Care, your hard-earned assets could fall into the hands of your Local Authority in order to pay for the care you need. There are ways to prevent this happening, and you can set these in motion now before it’s too late.

Protect your assets in your Will

When couples make their Wills, they can set out how they wish their assets to be distributed. Your own half share (including the family home) could be placed in trust for your children or other beneficiaries, rather than being passed to your spouse. This will effectively protect your assets, including the home, from being seized to pay for Long Term Care. A Protective Property Trust Will fulfils this exact purpose, enabling you to pass assets onto loved ones but ensuring your surviving spouse continues to benefits from the assets placed in the trust.

Protective Property Trust Wills

Protective Property Trust Wills can be challenged by Local Authorities, and it’s possible that this type of Will may not protect all of the family home. They can not, for example, protect assets if both you and your spouse go into Long Term Care, and can not be set up by single people.

Use of Lifetime Trusts to protect assets

An alternative is to place your assets in a Lifetime Trust, rendering them unavailable for use as payment for Long Term Care fees (6 months after being placed in the Trust). Unlike Protective Property Trust Wills, this is a good option for single people and for couples where both members of the partnership end up needing Long Term Care. With Lifetime Trusts, no probate is necessary on death, which saves time and money.

For simple, down to earth advice on protecting your assets against Long Term Care fees, get in touch with us. We will be happy to give you our best advice and can help you in making a Will, understanding what to do when someone dies and issues such as Lasting Power of Attorney in the UK.

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Paying for long-term care in our later years is an emotive topic which concerns a lot of people. Here is just some of the guidance we can give. Every case is different, and we urge you to get personalised professional advice and guidance which will take your exact situation into account.

Financial help for long-term care

At present, financial help for those needing long-term care is limited and down to your individual local authority. Local authorities assess an individual’s health needs and their ability to pay.

Unfortunately, those who are deemed able to pay for their own care often have to sell their family home in order to afford the fees. The means test level (above which no financial help is available) is just over £14,000 and this usually includes the value of the property. Compare this to a place in a nursing home, which now costs an average of £36,000 a year (with a good care home in Kent costing nearer to £50,000 a year).

Paying for care: your questions answered:

Will I need to sell my home to pay for long-term care?
Quite possibly. The requirements of the ‘deprivation of capital’ rules, and the way your local authority interprets the rules, will over-ride anything you do. These rules allow the local authority to overlook any arrangements you may make to secure your assets (including your home). Even if you give money or property away, the local authority can pursue the recipients, even if they are your children or grandchildren.

What if my partner is still living at home?
If your spouse, civil partner or another close member of family over the age of 60 is still living in the house, the property cannot be sold to pay for your care home fees.  So if an elderly relative has moved in as a carer, this could reduce future care costs. In addition, it should also be disregarded if care needs are classified as ‘temporary’. Couples may be able to permanently remove the property from the local authority’s influence by changing ownership to ‘tenants in common.’ This allows both partners to leave their half share to other beneficiaries or put the half share into trust. If either subsequently needs long-term care, the other is entitled to remain in the property. On the death of the first partner, should the survivor subsequently need full-time care, the property may be valued at nil, since one half is owned by the beneficiaries – and nobody will want to buy half a house. At worst, just half its value will be taken into consideration when assessing your ability to pay.

Can I put my home in trust to remove it from the local authority’s equations?
You can, but it may not work if you do it too late, and there could be tax implications of doing so depending on the value of the home. Property cannot be assessed once it is in the trust, but there are no set rules governing this. There is no time limit beyond which transfers of houses into trust are safe. The local authority is looking for evidence that your significant motive in transferring the property into trust was to put the property beyond the reach of capital assessment.  And, if that evidence exists (no matter how old it is), it will have an effect.

What will happen to my other assets?
Your other assets, including investment portfolios, National Savings, ISAs and cash deposits, will be taken into account by your local authority when calculating your ability to pay care fees. However, assets with an element of life assurance (endowments, with-profits bonds and insurance bonds) should be excluded. So, we advise you rearrange your investments well before needing full-time care. 

DOES MY HOUSE HAVE TO BE SOLD TO PAY FOR LONG TERM CARE?

There once was a promise from the Government of care from the cradle to the grave. Somehow I think we can forget that one! The various media have been full recently on how elderly people are being forced to sell their homes to pay for nursing and residential care. Yes, there is provision for care through the NHS when we are sick or have an accident, but when we are older and need formal Long Term Care the response is “we will pay for your care after you have nothing left”

1 in 3 women will require Long Term care and 1 in 6 men. The reason for the difference is that generally speaking women outlive men; it’s a fact of life! It’s also a fact that women are the primary carers of men, so most men don’t have to end up in care. By the time the men have gone there is no one to look after the women, their children may be spread around the world and in most cases are not in a position to care for an ailing parent.

The Government did recently state that some of the costs relating to Long Term Care would be paid for. This was after recommendations by the Royal Commission. But what does that really mean and how would it affect you? I fact the Government only agreed to pay certain costs relating to nursing care but not for residential and personal care costs. If you have assets over £13,000 you have to pay. This could mean from £18,000 upwards per year. Under the Community Care Act 1990 the local authority has the right by law to seize the family home, put it up for sale and use the proceeds to support your Long Term Care costs. Last year over 70,000 were taken, that’s more than 200 a day, resulting in many beneficiaries losing their inheritance.

So how can you avoid this? It is illegal to deliberately transfer your property to children or trusts if the prime motive is to avoid paying Long Term Care costs. However, it is not illegal for you and your partner to make provision in your Wills that upon death your own half share of the family assets, including the home, is placed in Trust for your children or other beneficiaries instead of passing directly to the surviving spouse. The difference is that the surviving spouse does not own the deceased spouse’s half of the house, so you cannot be said to be reducing your estate illegally.

This kind of Trust is called a Protective Property Trust. It allows the surviving partner to continue to benefit from the assets within the Trust so should the surviving spouse have to go into care, half the house will always be saved. This kind of Trust is also important for young married couples to have in their Wills, especially if they have children. Without the Trust, should one of the couple die and the surviving spouse remarries and has additional children, then the children from the first marriage will miss out on inheriting their dead parent’s half of the house.

“It’s never too early to make a Will but often too late” – Jaci

Does the fact that the Chancellor has raised the married couple tax allowance mean that I do not have to worry about Long Term Care fees?

Absolutely not. The tax allowance in no way relates to the payment of Long Term Care fees. The only way to protect a substantial portion of a family home from Long Term Care fees is by setting up a Trust.

I have a disabled daughter. How can I make sure that she is cared for after I have gone?

By setting up a Disabled Discretionary Trust in your Will you can ensure the continuity of care and security for your daughter. If your daughter was to become a beneficiary of your Will, in all likelihood, she would lose all State and local authority funding. By setting up a Trust this can be circumvented as your daughter would not have an automatic right to receive income or capitol from the Trust, it would be at the discretion of the Trustees so therefore cannot be included in means testing.

Are there still reasons to set up Trusts in a Will?

Definitely. Trusts still have a key role to play in many people’s estate planning, and the Inheritance Tax changes to not alter this. Trusts can be particularly useful if you want to ensure that money is passed directly to children or grandchildren, particularly if they are from a previous marriage and also to ensure that there is money left to pass on. A Protective Property Trust can save a substantial portion of the family home from Long Term Care fees. If a couples total estate is worth over the £600,000, again Trusts can come into play to save tax and a trust can give the ‘right to reside’ or a’ Life Interest’ in a property before passing on to the beneficiaries.

I have lived with my partner for twelve years. Does this new allowance apply to us?

No, unfortunately not, it only applies to married couples and those registered under the Civil Partnership Act. It is very important that you both have Wills and depending on the value of all your assets, it would perhaps be prudent in have a Discretionary Trust written into each Will so that any Inheritance Tax can be mitigated or eliminated.

My husband and I have Enduring Powers of Attorney, are these still valid now that the Lasting Power of Attorney has come into being?

Yes they are, and always will be as long as they have been set up correctly. Unlike the new Lasting Power of Attorney they only need to be registered with the Office of The Public Guardian when the ‘Donor’ (the one giving the power) loses their mental capacity

“It’s never too early to make a Will but often too late” – Jaci

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