We are living longer than we used to. This is a wonderful thing; in just over 30 years, the number of people in Britain over 100 has increased 90-fold compared to 1911. Experts believe that, if the current rate of expansion continues, the centenarian population of the UK could increase to over 40,000 by 2031. In addition, people over 90 are the fastest growing segment of the British population.
So, if we’re all living longer, that also means many more of us are likely to need some form of long term care. The number of people requiring care has been on the rise for a while; as early as 2009, former Health Secretary Andy Burnham suggested 1 in 3 men would need long term care at some point, and half of all women would too.
Going into care isn’t something to worry about, but paying for it can be difficult and costly for yourself and your family. With that in mind, let’s take a look at the current legislation regarding care fees and how it may affect you and your loved ones.
Care Act 2014
This relatively new piece of legislation discusses a cap on care fees. This cap is set at £72,000; on paper, this first appears to suggest that once that figure has been paid, the person in care would no longer have to fund their stay. Unfortunately, this is not the case.
The cap only applies to care fees paid at the rate your local authority would pay if you were entitled to help with funding. As we know, if your capital is over £23,500, you’ll be expected to pay the entirety of your care fees yourself. This means that if your care home charges, for example, £800 per week, but your local authority would only be willing to pay £400 if you were entitled to funding, it would take you twice as long to reach the cap of £72,000. The cap also excludes accommodation fees and additional costs, so those needing care may still pay well over the £72,000 cap.
Paying for Care
Paying for care fees can be extremely costly; many people are required to relinquish their life savings and sell their homes to pay the full amount. Because local authorities only begin to help with funding when a person’s capital drops below a certain amount, valuable assets are counted in means testing, which may mean that after care, very little could be left as inheritance for beneficiaries in a Will. This is why it is vital that steps are taken to safeguard assets early, before care is required.
It is possible to give away your assets as gifts; some people choose to officially give their house to their children so that it is not included in a means test. This, however, carries some potentially disastrous consequences. If you choose to still live in your home after passing ownership to somebody else, you no longer have a legal claim to the home; the person you gifted it to could evict you from the property at any time. There have been cases in which parents have gifted the family home to their children… only to be evicted by their children later on.
Not only that, but giving away your assets when there is a significant possibility of you going into care can be seen as “deliberate deprivation;” knowingly giving away your assets so that they cannot be counted in means tests. Small gifts, like items of jewellery, are unlikely to prompt an investigation- a property worth hundreds of thousands of pounds, however, is a different story.
It is up to authorities to make a judgement call on deliberate deprivation; if you’re caught out, there can be serious consequences, such as the gifts being reversed and you still paying your fees in full.
So what can you do?
There are much safer ways to protect your assets; placing possessions and savings into a Trust can safeguard them for life, and has other benefits such as minimising Probate costs and duration or even eliminating the need for it entirely. This still needs to be done sooner rather than later; setting up a Trust can also be seen as deliberate deprivation if it is not done soon enough.
Ensuring you make the right provisions early is key to protecting your assets and giving your loved ones the best chance to inherit, rather than handing your savings over to care authorities instead.
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