Care costs – can they be avoided?

Paying for care has become a big subject and an ever-growing concern. Families understandably want to leave their hard worked for property and savings to their children and would prefer not have the value of their estate eroded by care fees. When these are likely to be more than £30,000 a year, they could have a significant impact on any estate.

Any part of an estate, including the home, with a value greater than £23,250 can be assessed for care costs. If your spouse, civil partner, or certain other family members, live in the house, then the property can potentially be excluded from the calculation.

It’s also worth noting that although joint accounts can be used in the calculation for the care costs, savings in the sole name of your partner cannot. So, if Mr needed care and he had a joint account with his wife of £60,000 only half of this could be counted towards the calculation. This seems confusing.

There is some help available from the state, namely the NHS continuing healthcare funding. This is said to be a fairly well-hidden benefit and has been found by many to be a complicated process. The individual in question needs to be assessed by a team of professionals, who will decide what level of funding can be provided. This could result in full funding, partial or none at all.

Consideration is also given to the cost of the care and a top up payment may also be required depending on the location and cost of the home. This is a real postcode lottery and with the ever-increasing pressure on the system it can be a real fight to get the help you want.

Other options may include trusts, where the property and savings are placed into a trust. These can be successful, however if it is deemed that the trust was set up to deliberately to avoid care costs, this would be classed as a deprivation of assets, as would gifting the funds away and would not be successful in removing the assets from the total value, so be warned.

Having property owned as tenants in common as opposed to joint tenants allows for a specified percentage of a property to be removed from the local authority assessment provided the arrangement had been in place for a sufficiently long enough period, usually 2 years.

Investment Bonds (Onshore and Offshore) are also excluded from the local authority assessment, although it has been known for them to try and include them until challenged by a Financial Planner. Once again, the bond must not have been set up to deliberately exclude the monies from the assessment as this would fall foul of the deprivation rules.

There are many options available to provide for care costs and meeting with a Financial Planner would enable you to discuss this in more detail and give you the confidence that this has been properly planned for.

Kristina Bailey Dip PFS

This information is provided strictly for general consideration only. No action must be taken or refrained from based on its contents alone. Accordingly, no responsibility can be assumed for any loss occasioned in connection with the content hereof and any such action or inaction. Professional advice is necessary for every case. It does not constitute legal or tax advice and must not be treated as such. Richmond House Wealth Management does not offer legal advice. The Financial Conduct Authority does not regulate legal services.