Protect Your Property from Long Term Care Costs
The subject of long term care is an emotional one for many people. It’s also very much a financial subject. Long term care can be expensive. There is no getting away from that. However, by taking the right advice and having the facts, it doesn’t have to cost you.
One of the most important things is to be prepared and, if possible, plan in advance. It could save you many thousands of pounds. Even if long term care may seem a distant and unlikely possibility, the sooner you put plans in place the better. Long term care planning could save you a fortune.
Did you know that on average, residential care costs have risen to £26,000? (1) This is a cost per year, and is more than the average UK salary. One of the most worrying things for people who are facing the prospect of long term care for themselves or a relative is the possibility that they may have to sell their property to pay these fees.
Perhaps playing on this, there have been reports recently of an email sent to people mentioning ‘austerity measures’ and claiming that local councils had the power to ‘force’ people to sell their properties to pay for long term care. (2)
This is not the case.
You do not have to sell your property to fund care costs. Neither do you have to buy expensive financial products to protect against long term care costs.
If you or someone you know needs care, there is a standard procedure that will be followed by your local authority. The first thing that will happen is that you or your relative will undergo a care assessment by the local council.
The care assessment is to determine exactly what care needs there are. So it might be that after the assessment, it’s decided that you or your relative requires support at home, to move into residential care, or to move to a nursing home. Long term care planning can really help here.
Following whatever is decided with the care assessment, you or your relative will undergo a financial assessment to determine who is going to pay for the care you need. This is where things can get complicated and where you will really benefit from expert independent advice on long term care. The financial assessment takes into account all your assets, which includes half of any joint assets you may hold such as a joint savings account.
At the moment, there is a threshold set on the amount of assets you can have without having to pay for any of your care. Assets include savings and property and if the total value of your assets exceeds £23,500 (which is the threshold for 2010 / 2011) you will be expected to meet all your care costs yourself.
The exception is if you are assessed as having needs that are medical and require professional nursing care, in which case, the NHS will pay for your nursing care. *
The rules around property as an asset, however, are where things get even more complicated. It’s also an area where people can easily be misled. Again, long term care planning in advance can mean you are armed with the facts to protect yourself and your family.
Local councils are not able to force anyone to sell their home. The rules can seem complex, but simply put, if you are one of a couple and your partner remains in your home, it will not be assessed as being part of your assets. If there is anyone else who shares your home with you who falls into a certain category, such as a relative with a disability, or a child.
So if long term care costs are on your mind, why not start now and get in touch with a good independent financial adviser who will help you with long term care planning by looking at all your circumstances and working to find an individual, cost and tax-effective solution for you.
For a free factsheet on long term care call Worldwide on 0845 230 9876 or e-mail firstname.lastname@example.org.
Source: (1) Daily Telegraph (2) FT Adviser
*The situation is different in Northern Ireland