bsglaw

Care Home Fee Planning

Recently, we have noticed a sharp increase in the number of people who contact us regarding Care Home fee planning.  This is understandable as in these times of austerity, people are concerned with protecting their wealth. 

Who pays Care Home Fees?

There are many facets to the rules regarding paying for care home fees and we would always suggest that you take independent legal advice if you are concerned.  However, the majority of people needing care will be liable for care home fees at some point, either in whole or in part.

How can I limit the effect of paying care home fees on my finances?

When people assess their monthly income, taking into account their pension(s), any state benefits and any income from savings and investments, many realise that the amount payable each month to the care home results in a small shortfall being taken from their capital.  This shortfall could be covered in one of the following ways:-

1. By selling any non liquid assets e.g. Property and combining the value of the same with liquid assets e.g bank accounts, your income can be maximised and used to make up any shortfall.  The benefit of this option is that it preserves the largest amount of money, should you die early, however if you did need care for may years, your capital would be diminished. 
2. An alternative is to rent out your Property so that the rent generated covers any shortfall. However, the income produced could stop if the property remains unoccupied at anytime or the tenant stops paying rent. In addition many people are reluctant to follow this route as it requires someone to assume the role of Landlord on their behalf and the Property will need to be maintained and insured.
3. A final option is an annuity.  In return for paying a one off single premium, an immediate care fees annuity is set up which provides the insured with a regular income to meet care fees. This can help to protect any remaining funds for future personal use or inheritance. However, it is worth remembering that you are paying a lump sum regardless of whether you require six months care or twenty years plus.

We have also noticed the rise of Care Home schemes which claim to guarantee that your assets can be protected from care home fees by passing them over to Trustees.  There are potential consequences which are often not mentioned and usually involve a compromise with your funds which may restrict access to your money or mean that you invest in assets that you would not normally consider.  Therefore, you should always seek independent legal advice before entering into any Care Home schemes.

One further option considered by many is the transfer of Property out of their name.  However the deprivation of assets rules generally make this option ineffective. 

If you would like any further advice on the above please contact Blackhurst Swainson Goodier LLP. Rebecca Lauder (rl@bsglaw.co.uk) or Amanda Owen (ajo@bsglaw.co.uk)  01524 386500.

Visit our website – www.bsglaw.co.uk