Many people in UK worry about the 40% of their assets the taxman will take from their estates when they die in the form of inheritance tax, but very few realise that your local authority might take 100% of your assets should you need long term care.
In our increasingly ageing population, it is difficult to avoid the notion that many of us (common statistics say one in four of us) will end up requiring care in our later years. In the Laing & Buisson, Care of Elderly People Report 2010 the Average annual care home fee with nursing care in London is £42,016 and in the Southern Home Counties and £40,924.
As a guide to funding in England (Scotland, Wales and Northern Ireland apply different rates) when an individual requires care they fall into one of three categories and are treated accordingly:
If you own a property you are likely to fall into the first category so in the event of you needing Long Term Care, once any cash savings you might have are used up, your property may be sold to pay for the ongoing cost of your care until all but £14,250 has been used.
Under the Community Care Act 1990, the local council have the right, by law, to force the sale of your home to pay for these costs or to take a charge against your property to be repaid on the eventual sale of your home. It is estimated that 70,000 homes are sold each year to pay Long Term Care cost. Note that the home is excluded from assessment if:
So how can you protect your home (and other assets) from being sold to pay for any Long Term Care Costs?
Firstly, there are some things you should not do. Some people believe that simply transferring ownership of their home or other assets to their children will avoid Long Term Care costs. Unfortunately this isn’t true! It is not advisable to deliberately deprive yourself of an asset if your prime motivation is to avoid Long Term Care costs.
Cornerstone Wills has several solutions to mitigating the costs of Long Term Care and which solution works best for you will depend on factors such as:
One or more of the following options might be best for your requirements. Click on the link for more information:
It is worth noting that whatever solution is chosen, in order for the arrangements to have the best chance of being successful it is vital that the arrangements are made as early as possible so as to avoid the “deliberate deprivation” rules mentioned above.