The funding of long-term care is becoming a major political issue, but for many families it is already a burning personal issue.
Depending on your income you may get state help, although a person who owns his or her home is likely to fail the local authority means test and be deemed a “self-funder”. In England and Northern Ireland this threshold is £23,250 whilst in Scotland it is £26,000 and Wales it is £24,000 (Source: www.adviceoncare.co.uk September 2013).
In most cases this includes the value of any property owned. However, there are circumstances in which the family home is ignored: if you have a spouse or relative aged 60 or over still living in the home it will not be included within the local authority’s financial assessment. It should also be ignored if your care needs are classed as “temporary”.
You need to be aware that not all benefits are means-tested. For example, people who need nursing care (as opposed to “personal care”) will receive a contribution towards these costs, regardless of their financial position. In England this is normally paid at £110.89 a week, with payments made direct to the nursing home.
For many people the self-funding route is going to be their only option. It is a worrying prospect as the cost of care can quickly add-up and eat into your savings.
On average, someone who requires care in a residential care home will pay £550 per week, and for a nursing care home £728 per week (weighted averages for the whole of the UK, source Laing & Buisson Care of Elderly People UK Market Survey 2013/14, a huge ongoing amount to find at any age, let alone in later years.
Perhaps the most popular option for paying for long-term care is an immediate care annuity, which pays a tax free fixed income for life, provided that it is paid directly to the care home provider.
Their money will not run out and they will not have to move into a local authority-run home later.
The price depends on a person’s age and health when going into care – the longer the insurer expects them to live, the larger the upfront cost.
Many people fund this annuity when they sell their home. Of course, the downside is that if the person dies shortly after going into nursing care then you will have paid out more for the annuity than the cost of fees.
Alternatively, with careful planning you could build an investment portfolio designed to pay an income without taking undue risk. You will need expert help because it is crucial that your capital is protected to a large degree.
We are all expected to live longer but while that is good news it is likely to mean that more people will need to consider care fees – not just for themselves, but also for their parents.
To receive a complimentary guide covering Wealth Management, Long Term Care or Inheritance Tax Planning, produced by St. James’s Place Wealth Management, contact Leigh Bennett on 01424 236500, by email firstname.lastname@example.org or visit www.lbwm.co.uk.