The social care agenda and who foots the bill for care were all over the headlines earlier this year as a major part of the general election campaign. Given the election result and the focus on Brexit, it seems appropriate to clarify the current situation.
The general aim appears to be to lift the current £23,250 cap on how much individuals pay towards their care costs. However, given the general election result this is still very uncertain.
That makes it difficult for us to plan for what we will need to keep back to fund our care as we age.
None of us of us know what help, if any, we are going to get from our local authority or the NHS. What of our savings and property can we legitimately protect and pass on to our loved ones and when?
Currently 80% of pensioners own their own property. Whether we’ll be able to leave it, or indeed anything else we own to our loved ones, particularly if we spend our latter years needing care, very much depend on the circumstances of any gifts we make, the law surrounding such gifts and the cost of our care.
NHS continuing healthcare
Some people needing care may, after being assessed by a team of healthcare professionals, be deemed to have a ‘primary health need’. Their care needs will then be funded by the NHS either in whole or in part.
It is difficult to meet the criteria and the assessment process is complex. So it’s important to insist on your right and those of family and carers to be listened to by the professionals who will make the decision. For those who feel they should qualify but they are not being listened to, they should seek specialist legal advice.
Who will pay for my care if I don’t qualify for NHS funding?
If you’re not eligible for NHS continuing healthcare, you should investigate whether or not you’re eligible for any support from the local authority. The cost of care varies for people in different circumstances. It generally depends on a means tested assessment and everybody needing care will be assessed. The care offered will depend on the individual’s needs - be it care at home or full time care elsewhere. Who will then pay for that care will depend on what their savings and investments are.
To decide who pays, the local authority will carry out a means test to consider what income and capital is available. It will also look into any gifts that have been made by them in the recent past. The capital taken into account can also in certain circumstances include any property they own.
Currently, if a person has more than £23,250 in savings then the cost of any care services they need will not be supported by the local authority.
However, if they own their own home but it houses their spouse or partner, a relative over 60, a child of theirs under 18, or a disabled relative, the house cannot be taken into account as part of their assets.
Gifts in the lead up to the need for care
Some people may consider giving away their assets to loved ones to avoid them being taken away to fund care costs. Though there are some legitimate reasons for doing so, it is important to avoid falling foul of ‘ Deprivation of Asset’ rules.
If large gifts have been made and the local authority can successfully show it has been done to avoid paying care fees, they may refuse to fund a person’s care.
Whilst it may seem sensible to give assets away to loved ones; remember that once they are gifted away they are gone for good. What if you later become estranged from the recipient or the recipient dies first, or they go bankrupt or get divorced?
Gifts of property directly to loved ones for whatever reason needs very careful consideration.
If you decide to make such gifts, it is often much safer to create suitable family trusts. Trusts often present less danger of the value of the gift being lost should there be an early death, divorce, bankruptcy or falling out.
With suitable trusts it is still possible for the person making the gift to be entitled to live in the property or have any income assets held in trust produce. Trusts give added protection, but specialist legal advice should be sought if you are considering setting one up.
This all illustrates how important it is for there to be a well thought out and consistent estate and asset protection planning strategy. One that carefully considers lifetime gifts, and incorporates into the plan a well drafted Will setting out what is to happen to your property and savings after you die.
Finally, no overall strategy is complete without people ensuring trusted ‘Attorneys’ are in place, who can step in to manage their affairs if they are not able to do so for themselves.
That is achieved making suitable Lasting Powers of Attorney in good time whilst they are well enough to do so.
It is important to remember is that there are always legitimate options available to people to allow them to protect their assets, not only from burdensome taxes, but also from expensive care fees.
Seeking specialist legal advice, can make a great deal of difference to your security and wealth. It can take the worry and stress away so that you can get back to living and enjoying your life.
Posted on Tue, 3rd October 2017