Care fees can be £30k or more a year, so it is no wonder that there is huge debate about who should foot the bill, the state or the family, and what measures can be taken to mitigate the cost. With regard to the state or family argument this is one of those that polarises opinion with one side arguing that the state is responsible for the health and wellbeing of its citizens and should pay for the care of the elderly. On the other side is the argument that if the individual has sufficient assets to pay for their own care, then they should do so. In between are suggestions that take elements from each.
Quoting from Age Concern; the current situation can briefly summed up as
Most people will be expected to pay something towards the costs.
If your care is being organised by the local authority, then the main steps of the process are:
- Your local authority does a care needs assessment to identify what help you need.
- They make recommendations about your needs and whether or not you need residential care – this is called a Care Plan.
- They work out a budget to ensure you get what care you need – this is called a Personal Budget.
- They do a means test, also called a financial assessment, to work out how much you should pay towards your care home fees and how much they will cover.
If your care is arranged by the NHS or social services, you may not have to pay for some or all of the care.
As you would expect, Age Concern have a lot more information on this subject and I would urge you to take a look at what they have to say.
The means test is the one area that seems to be universally disliked. At present, if your assets exceed £23250, you can be expected to pay for your long term care costs. If you do not have that money available in cash, then the costs will eventually be met from the sale of your assets, which is usually your home, upon your death. It is not surprising then that considerable effort has been made in order to think of ways to mitigate these costs and protect the assets of someone who is likely to go into long term care.
When it comes to trying to mitigate the cost, there has been an entire industry that has grown around the subject of Estate Planning, not least because a great number of people are worried about what will happen to their assets should they have to go into care. Being in the situation where my interest in this subject is morphing from the professional to the personal, I made a point of listening to “The Care Fee Trap” a Money Box programme on BBC Radio 4. Just click the link and listen to it for yourself.
Although the programme largely focused on the behaviour of one Estate Planning company, it is probably better to put that element to one side and concentrate on the actual issues is raised. Most of you who have read any of my previous blogs will know that I am a passionate advocate of asking questions and doing research before going ahead with any product or service. With the subject of planning for possible care home costs I can’t think of a product or service that needs such questioning and research more.
The common thread running through all the schemes that purport to protect assets from the means testing process is the transfer of those assets into a trust. Simply put, the assets cease to be your property and instead become the property of the trust and therefore (so it is sometimes claimed) cannot be included in the means testing process. Such plans may not be the perfect solution they initially appear to be. There is a part of the means testing process that is called “Deliberate Deprivation” which seeks to address situations whereby the authorities believe that an asset has deliberately been moved from your ownership to that of a trust, with the main purpose of avoiding long term care costs. It is the phrase “main purpose” that drops a degree of ambiguity into the situation and makes the whole situation open to interpretation and can result in the whole plan becoming meaningless.
No estate planner would be daft enough to compile a report for you that said the reason for putting your assets into trust was to avoid long term care fees. However, is is often stated, usually verbally, that the avoidance of such fees can be a side effect of putting your assets into trust for other reasons. It may well be that these other reasons are perfectly legitimate and are borne out of genuine need. The thing to remember is that you can expect the authorities to investigate and ask you, and your family, what those reasons are. If they do not stand up to scrutiny, then the fact that the have been put into trust will be completely disregarded.
You may well be coming to the conclusion that the whole area of estate planning and will writing is a lot more complex than you first thought. It may come as a surprise then, that the process is actually unregulated. It is possible that the company you use may well be regulated through their other activities, solicitors being an ideal example. However, if it is a company that just does estate planning and will writing, then they do not have to be. In 2013, it was recommended to the government that activities such as will writing and estate planning be regulated. The recommendation had the backing of consumer groups and industry professionals who wanted to raise the profile and show their expertise in a formal way. For reasons I just cannot fathom, the government declined to regulate it.
If you are worried about the cost of long term care, do your own research. Do it carefully, don’t rush it. Don’t rely on just one source of information. As well as the age concern link above have a look at the SFE website. The SFE (Solicitors for the Elderly) is an “independent, national organisation of lawyers, such as solicitors, barristers, and chartered legal executives who provide specialist legal advice for older and vulnerable people, their families and carers”. And, of course their members are fully regulated.