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.

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. 

Did you know there are around 2.5 million between the ages of 70 and 74 in the UK? At a recent speech given at the British Museum, Shadow Chancellor George Osborn talked of plans to strengthen the country’s economy, bringing back Britain’s savings culture and encouraging everyone to save for retirement. How much do you save? Do you know how much you’ll receive when you’re retired? Don’t put this important issue off!

Conservative plans to scrap annuities 

Osborn’s speech outlining Conservative plans to scrap compulsory annuitisation at 75 was welcomed by pensions and savings experts. For instance, Tom McPhail at Hargreaves Lansdown was reported as saying: “There is no decent justification for forcing investors to buy an annuity. There are currently around 450,000 people aged 74 and the best part of 2.5 million between the ages of 70 and 74. A fair proportion of them will not want to buy an annuity.”

McPhail pointed out that 90% of pension funds are worth less than £50,000 at retirement, so most people will still benefit from taking an annuity. “For investors with small funds, an annuity will continue to present the most efficient way to eliminate investment and longevity risk,” he said.

A rule-change around annuities would help those of you with a more substantial fund or another secure source of income (such as a final salary scheme). It will also benefit prospective savers in the long-run. As McPhail said, it will hopefully send out an important message: “That they will be able to retain control of the money that they have saved up. This in turn will encourage more people to engage with the pension system in the first place.”

Many people are of the opinion that annuities have no place in today’s (and tomorrow’s!) retirement market. Kevin LeGrand, Head of Technical Services at Buck Consultants, said: “Compulsory annuitisation is a hangover from bygone days when people’s retirements were shorter, they had less money to play with, less flexibility and fewer financial opportunities.”

What do you think? Do you welcome the proposed changes? If you have any questions about annuities, savings, pensions and alternatives, speak to us for no-nonsense, friendly advice. It really is never too soon to start planning for your retirement.

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