Long Term Care Fee Planning & Wills
One of the main concerns for many of our clients is the funding of potential long term care costs, and the significant impact these costs can have on the value of their estate which they hope to leave to their children, family and other loved ones.
Many have experienced this happening to relatives and friends, but there are relatively simple ways of reducing the potential impact long term care costs can have on your assets by ensuring your Wills are structured correctly.
At Assurewills we specialise in providing this type of estate planning advice and will always be happy to discuss your circumstances and outline the best way of protecting your property and other assets.
Having recently seen the Government announcement of new rules covering the funding of care fees from April 2017 onwards, we have below provided a summary of the current situation, and what is proposed for implementation from 2017.
If the total value of your assets (including your home) exceed £23,250 (2011/2012) then you are required to fully fund your own care fees, which include both the costs of nursing care and any residential costs (bed and board). If your major asset is your home then your family may be forced to sell in order to meet these costs. It is estimated that in the region of 30,000 are in this position of having to sell their homes each year.
With average care home fees ranging anywhere from £30,000 to £50,000+ per annum the cost of care can soon consume the individual’s assets, leaving little to pass on to children and other family members, and often this is the case.
Proposals from April 2017 onwards:
New funding rules have recently been announced with the intention of them being introduced from April 2017. A summary of the proposals is as follows:
The cost of care is to be split into two areas – the cost of nursing care and residential or ‘bed and board’ costs.
Nursing care – each individual’s liability to nursing care costs is to be capped at a lifetime total of £75,000. Once this level of individual funding has been reach the State will fully fund any further nursing care costs.
Residential costs – each individual will still be required to pay for their own residential costs which include the cost of residing in any care home and food costs etc. There will be an annual cap on these costs of £12,500 per annum.
If you have total assets (including the value of the family home) in excess of £123,000 then you will be required to fully fund the costs until the capped levels are reached, if your assets are below or fall below £123,000 then the State will part fund your costs until the value of your assets fall below £14,000, at which point all of your care costs will be State funded.
It has also been proposed that care costs can be deferred until after your death, at which point your estate will be charged with the total amount due before any remaining assets are passed on to your family (as set out in your Will).
In summary, if you are in care for 5 years, and presuming the cost of your nursing care reaches during that period the capped level of £75,000, we estimate care costs would be as follows:
Nursing care fees £75,000 capped level
Residential costs £62,500 5 years at £12,500
+ £12,500 per annum residential fees from year 6
What action can you take?
By adopting some straight forward estate planning and having correctly structured Wills it is possible to ensure assets such as property are ‘ring fenced’ and will be available to be passed on to your children / family. We are able to advise you on the best way of securing your assets, and ensuring your family remain in control in what can obviously be a very difficult time. Please contact us today for a no obligation discussion.
If you are one of the many who are concerned about the potential impact this may have on your estate, you should give consideration to the following:
Lasting Powers of Attorney -
As part of your estate planning you may find lasting powers of attorney can prove invaluable, ensuring your family are able to retain control.
By drafting a lasting power of attorney now, you are simply providing those you trust with a legal document which will allow them to manage your affairs on your behalf should you ever reach a point when you are unable to manage them yourself. This will ensure those you trust will remain in control of your finances and healthcare decisions.
Property Protection Using Your Wills -
If you own your property jointly with a spouse or partner it is possible to provide a level of protection for your property by structuring your Wills correctly - more information is provided on our property protection Wills and Home Protection Trust pages.
For many this type of planning can prove invaluable, and may well provide the peace of mind you are looking for. Professional advice to ensure you take the right steps is vital, and at Assurewills we specialise in advising our clients on all aspects of the above. Contact us today for an initial discussion.
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