Planning for later life
With the costs of funding care in later life an unknown quantity for many people, it is currently still up to the individual to fund the cost of their later life care unless they have assets below £23,250.
Planning ahead is important rather than waiting until care is needed. Statistically 1 in 5 people over the age of 70 currently receive care in the home and an estimated 410,000 people are living in residential care, with 170,000 self-funding and 47,000 local authority funded. The remainder are either fully local authority funded or NHS funded.
It is also estimated that the average stay in a private care home is 2.2 years although 25% of people will still be in care after 3 years and the average cost of care here in the South East is £747 a week.
How local authority funding is decided will depend on a number of factors which include:
- If you own your own house but your partner or qualifying relative (such as a relative who is aged 60 or over or is incapacitated) continues to live there, then it will be disregarded as an asset.
- Investment Bonds are also typically excluded.
- If you are married, half of your non-state pension income is also excluded as are personal possessions such as antiques or art.
Planning ahead for the potential costs of care for you, a relative or your spouse/partner means looking at financial and estate planning to decide how the costs will be met. A financial advisor will be able to guide you on how to hold and invest capital to either maximise income potential or so that it will be disregarded as available capital.
Lasting Powers of Attorney should be prepared to deal with all possible outcomes and to look after your financial affairs and health and welfare needs in the future. Choosing the right attorneys who will make sensible financial decisions on your behalf or follow your requests for health and welfare provision, such as your choice of care home is vital, before you are no longer able to make those decisions for yourself.
Creating a lifetime trust can offer a level of protection for property and savings if you are concerned about them being used to pay for care fees in the future as can transferring assets directly to your family or friends now, however it is important to take expert advice.
You are not permitted to deliberately give away assets to avoid paying for care and the person who received the gift would be liable for paying for care costs. You will also be giving away control of your assets earlier than you might have wanted.
It goes without saying that it is also vital to have an up to date Will in place which should be reviewed every few years or on the occasion of marriage, divorce, buying or selling a house or the birth of children or grandchildren. Couples may want to consider a Will trust to protect their whole estate or just the family home. On death, the assets pass into a life interest trust and the surviving spouse will be entitled to live in the property and or receive income from investments for their lifetime. This is useful to consider where there may be children from previous relationships that you want to provide for in the future, as well as a current spouse that you want to ensure is financially secure after your death.
As always planning ahead and discussing these issues with your loved ones before it becomes a necessity gives a greater degree of certainty for everyone and will help ensure financial security and all of your wishes are carried out in the future.