Welcome to another in this series – 1000 words that will help you solve a financial matter, simply and without any fuss. For more information please pop over to www.thefinancezone.co.uk/contact
I am Richard Smith and I’ve spent more than thirty years providing hands on and personal advice to people like you.
I now own and manage a financial education business – that teaches you the truth about modern money. How it works and how to make it work for you.
Care Fees – Care Fees Planning
Since the 2014 Care Act most of you have either been worried about the implications of the new rules around funding for care or trying to do something about it.
The reality is much of what you think you can do won’t work, and it’s fairly certain that most of the ‘solutions’ you will be sold won’t work either.
The state has organised the system to ensure that there is an overriding responsibility on local Government to provide for those that need looking after.
There are two areas of importance.
- Not being able to care for yourself due to illness
- Not being to care for yourself because of age/infirmity
In the first instance (broadly) the NHS picks up the costs under the Continuing Care regime.
In the second, you the individual are expected to pick up your own costs in the same way as you have done over your working life.
Your own assets will be used to cover the costs of your care until these have been reduced to £23,250 (19/20 figures).
Overwhelmingly the thing that concerns most people is that all of your assets will be used up to fund care in later life and this is a real danger. Thing is, most people needing care really are the end of their lives – sorry, not meaning to sound harsh but that is the reality according to the statistics.
Because of this fear, there are many solutions in the marketplace that just don’t work. If you like the words care fees scams – then this is what they are.
If you are offered one of these as possible solutions read my note on each one.
- Property/Probate Protection Trusts – they don’t work. Don’t waste your money.
- Giving Away Assets – very unlikely to work
- Transferring Ownership – No, not ever.
None of these are new things and the Government has quite rightly made sure none of them work – to protect the UK Taxpayer.
The facts around long term care needs (from Age UK) indicate that the average time spent in a care home is around two years and the average cost is around £50,000 per year, around 3% of the over 65 population ends up needing care and of these majority are women.
You need to remember that planning away a liability is hard but you do have some choices.
Here are my top tips.
If you or your parent looks likely to need care be prepared to spend time solving the problem, it will take hours to get it moving forward.
Getting an assessment from your Local Authority (LA) is pretty straightforward but could take a few hours for them to carry it out and a few weeks for an appointment. Make sure you get your personal financial situation in order before the meeting. At least three months bank statements, details of pensions, valuations of investments or homes.
Social services are always happy to let you do the work, they are often very busy so are normally pleased to do so. Make sure you ask them for help, allow them to get involved.
If you are trying to deal with this as a child of the person needing care – it’s a time-consuming paper chase. Really.
You should allocate specific time to dealing with it (put it in the diary) and treat it as work that needs doing or you will find you lunging from crisis to crisis with it.
Hospital staff, including social services within the NHS rarely take notes at the patient’s bedside. There is often a gap between a patient’s real needs and their notes.
Put a power of attorney in place sooner rather than later.
Review all Estate Planning and update yourself, especially if you are a widower/widow as the taxman relies on your having certain records in order to claim certain allowances.
Don’t give away assets/wrap up your main home in any kind of trust – it won’t work and you will end up spending thousands. It is likely that any giveaway will be tested by the LA, and if found against you, the potential beneficiaries of that asset will end up having to pay the costs of your care, and this is enforceable by the local County Court. 2014 Care Act.
If it looks likely you will need some form of care home, then make sure you are assessed for Continuing Care at the very first instance. Social services will wriggle and refuse – they always do – make sure you get the assessment done.
If you are ‘self funding’ paying for your own care costs then you will qualify for Attendance Allowance make sure you submit a claim.
The LA – Local Authority has an obligation to provide funding for your care under the 2014 Care Act. They may wriggle and a squirm and may even forget to mention it. But they do, make sure you ask the questions.
The LA also has the right to ask you to cover the costs of your care but you do not have to sell your home now. The costs of your can be recovered by the LA at a later don’t.
Moral here is don’t be panicked into selling a house.
Consider all the other options before a home, in-home care, with stair lifts and cleaners these can be a life saver.
In order to qualify for formal NHS funded Continuing Care there needs to be substantial health element – this means you are likely to be in a Nursing Home and less likely to be in a Care Home.
Pension income continues until death so this will help with fees overall. If a person can’t fund their own care – then the LA will put a charge on any pension income, deduct the costs of care and refund the rest.
I hope you found this helpful. It is based on my thirty years of financial planning and ten years of dealing with my own parents situation.
Richard – MoneyTrainers
www.thefinancezone.co.uk for personal, hands on help with this area of planning.