An increasing number of us will need some kind of long-term care during our lifetimes, either in a residential home or in our own homes. Many worry about the impact of years of care fees on family wealth, but it is possible to limit care fee spending with good financial planning.
With the planned cap on care fees now deferred until 2020, there is a continued need for advice about how to meet care costs.
We have advisers with specialist Long Term Care qualifications, some of whom are accredited by the Later Life Academy whose training programmes provide ongoing professional development in meeting the needs of elderly or vulnerable clients. We have special procedures in place to safeguard vulnerable clients.
Funding for care fees is a complex area: some elements may be funded by the NHS, for example, and there are a number of benefits such as attendance allowances that can be claimed.
Local Authorities will provide assistance with care fees for those whose assets fall below a certain level, depending on your geographic location. Even after your wealth has diminished beneath this threshold, you may still need to contribute to the cost of your care from your income. The Local Authority will take the value of the family home into account when assessing your assets, unless you share your home with your spouse or dependent family member.
If you are able to fund the cost of care yourself, you will have much wider choices and flexibility in your selection of care provider or home. Funding could potentially come from a range of sources:
- Careful investment management and the realignment of your investment portfolio to focus on income-producing investment assets may provide the solution for funding care. If you have sufficient investments to meet the cost of your care from the income they generate, then this may be the best route forward, although of course more income can mean more income tax.
- Pension savings may also be able to provide the solution: with pension access much more flexible now, it may be possible to draw down sufficient funds to meet care costs. It is important to work out how quickly this route will deplete pension savings, as many people rely on their pension to provide for them throughout retirement. Others may want to earmark the pension fund for their dependants.
- An alternative to using investment or pension income could be an Immediate Care Plan that, for a one-off capital payment, will provide a top-up to income for life. Although the purchase of such a plan will require an initial capital sum, it will ringfence the amount spent on care, preserving the remainder of the estate for the family. The funds provided by the plan are generally paid direct to the care home, so are not taxed as income on the person in care.
- Selling the family home is often the solution for anyone who lives alone and needs to go into care. However, if the family would prefer not to sell up at this point, Local Authorities are obliged to offer the chance to access funding for care by means of a charge on the property. This type of arrangement is known as a Deferred Payment Agreement and the sum involved must be repaid either when the property is sold or when the owner dies, whichever is soonest.
Talk to an S&P specialist if you or a loved one is facing the cost of care. We will work with your family to ensure that the level of care you require can be sustained and that the cost can be controlled.
The value of your investment can fall as well as rise and you may get back less than you have invested.