Care Home Costs

Happy couple enjoying time together, relaxed, knowing all is in order
 One of the most common questions we hear is “What happens if I need to go into Care – How can I protect my assets?”

A little about Care Costs

The cost of care is between £1,200 and £2,000+ PER WEEK (August 2024) depending on your location (see  here ). If your total assets are between £14,250 and £23,250, then the State will partially fund your place (this is currently under review). Above that, it’s down to you. Below £14,250, your care is paid for in full.

Even at the low rate of £1200 per week, this equates to £62,400 pa and with the average stay of about 30 months, it would be £144,000, (or at the top rate £240,000 pa).  Effectively, if your property is worth £295,000 (the average house price in Rugby in June 2024) and your stay is a home at the higher rate, your property will be “absorbed” in about 36 months. Before you think, “Oh, it’s capped at £86k”, unfortunately, it’s not!

Clients “Mistaken Beliefs”

  • Many people think they can avoid care fees with basic planning. Even with the best planning there is NO guarantee the fees can be avoided. 
  • Some people believe if they put something in place and there’s a seven-year gap between planning and needing care, they’ll be OK. Not always True. The caregiver will still try to gain access to the funds for as long as it takes if they believe Deliberate Deprivation (DD) has been used.
  • Some believe signing over their main asset (usually their home) at some point to their kids will sort it. Again, if DD is “cited” then this will cause the asset to be clawed back. Also unless the client has been paying the going rent to live there, it still will be seen as the clients, not the childs. Plus there are a whole lot of reasons to NEVER sign over your property.
  • If the client is of an age where care is forseen and they move funds to prevent care fees, again it’s deliverate deprivate (DD).
  • Quite commonly, “Fred” (real name protected!) down the pub says “Sell your house and live with the kids and give them their inheritance early”. This is a real can of worms especially if the client lives the seven years for Gifting so there’s no inheritance tax to pay but on year 8 goes into care… If Deliberate Deprivation is proved, the kids will end up funding the care anyway.
  • Often, clients research their plan and take online advice saying, “Yes we can stop you having to pay Care Fees, Guaranteed”. Nothing is “Guaranteed”, and these providers are simply lying.

The only way to at least try to prevent this is to use Trusts. The Trust has a side effect of care fee prevention, it is never the primary reason.

The Trust is designed to leave the asset to the beneficiaries directly in as complete a form as possible. If this is put in place early enough it MAY be successful in saving at least 50% of the asset for the beneficiaries.

  • Thinking of a couple, if Mr has died 10 years ago and Mrs is at home, but now need care. Thirty years ago they put preventative plans in place. It’s arguable that it was impossible to consider Mrs going into care in her 70’s. They would have had no clue thirty years ago, therefore not deliberate deprivation.
  • Same couple, but only put their plans in place 10 years ago (in their 60’s) just prior to Mr’s death. She now needs care the care provider is arguing Deliberate Deprivation and now going through the court to unwind any planning done.
  • Another situation where the same couple put plans in 10 years ago, but Mrs (70) was hit by a bus and ended up needing care? How could you forsee this? No Deliberate Deprivation

There are so many scenarios but the basic rules for the best chance of success are

  • Plan early using Trusts to direct at least 50% of the main asset to beneficiaries (up to 100% depending on setup).
  • Don’t leave it until you’re in your seventies.
  • You need to be fit and healthy with no known underlying areas of worry – only you know this
  • Be absolutely clear it is NOT guaranteed to work, BUT
  • If you do NOTHING, it definitely cannot work.
  • It’s not right for everyone, and this is why we discuss it in detail so you can decide.

Essentially, you are spending a small amount now to potentially protect a huge amount in the future.  Just consider how much you currently spend annually on home insurance, and this plan is a drop in the ocean, and only spent once. The plan also follows you as you move at no extra cost.

Ideally it has to be looked at like an insurance that you might never need, but if you do, you’ll be very glad you did. (and so will your beneficiaries).

If this interests you, please book a free visit to discuss, or just mention it when we meet.

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