November 01, 2017
It’s estimated that over 400,000 elderly people are living in care homes with most expected to pay towards this from their income and capital.
The cost of care can vary by location and whether nursing care is needed. According to a 2013/14 report, average care homes costs can be:
Generally, if your local authority has arranged your care home, your contribution will be means tested to assess how much you will pay. The current thresholds are:
So, is there anything we can do to prepare for this?
When it comes to looking at our future years many of us are now starting to plan ahead. You may have already made your Will and regular readers of this column will know how highly I recommend a Lasting Power of Attorney.
But your planning can also help to reduce your exposure to care home fees by your Will including a Protective Property Trust.
For many, the main and only substantial asset will be your home. Having no doubt worked most of your life to pay off a mortgage and perhaps leave a legacy for your children, it's horrible to think that you could have to sell the home to fund future care needs.
Whilst your home won’t be included in the means test if a partner or close relative still lives there, if one partner has died and the surviving partner needs to go into care, the full value of the home will be taken into account when the assets are assessed.
This is where a Protective Property Trust Will can help.
These are only suitable for two partners who own a property jointly. Essentially, when the first partner dies, the property is held in trust for named beneficiaries (usually, but not always, children of the couple). If the surviving partner then goes into care, the half of the property in trust is protected from the means test because it is not an asset of that surviving partner.
Such a Will can also protect the share of the home of the first partner to die should the surviving partner remarry, as that share will still be held in trust for the original beneficiaries rather than passing to the new partner. Additionally, it can also potentially reduce your estates liability for any future Inheritance tax.
So, if you think it’s the right time to review your later life planning, please give me a call.