The local Primary Care Trust will carry out an assessment to see if a patient qualifies. This route is often overlooked. However, many that do apply fail to qualify which result in patients being means tested for care fees.
Long Term Care fees
Nursing Home fees can typically be £40,000 pa upwards depending on
where situated and the intensity of care.
Care fees can absorb up to 100% of your income and capital down to £23.50 per week and £23,250 respectively to pay for care and accommodation.
20,000 homes were sold in 2009 to pay for care. Local authority means
testing can force the sale.
Social Care Reform Proposals
You will be aware that proposals subject to the passage of legislation will
mean that from 2017/18 there will be
• £75,000 cap for an individual’s of pensionable age care costs.
It is expected that 16% of people to face care costs in excess of £75,000.
• People of working age who will require care will have a lower cap.
Those under 18 will have a cap set at zero.
• Financial support will start from around £123,000 (up from £23,250)
• Those with the least will receive the most support.
• The lower capital limit will increase from £14,250 to c£17,500
Individuals will be responsible for general living costs. People in domiciliary care remain responsible for non-care fees such as rent and utilities. The cost will be the equivalent of £12,000 pa in 2017/18. Plus additional services such as a spare room for family visits.
From 2015
No one will have to sell their home during their lifetime.
Whilst the proposals are an improvement, care fees can still have a
significant impact on an individual’s wealth.
Disregarded assets for means testing
The family home is disregarded in the means testing assessment, whilst both its owners are alive. It is also disregarded if he or she is living with a relative of the resident or member of his family who:
• is aged 60 or over, or
• is aged under 16 and is a child whom the resident is liable to
maintain, or
• is incapacitated.
Personal possessions are disregarded.
Life assurance policies, including many types of investment bonds, are also disregarded.
Many trusts are also disregarded, including Will trusts, life interest trusts and discretionary trusts.
This list is not exhaustive.
Deprivation of Assets
“A resident may be treated as possessing actual capital of which he has
deprived himself for the purpose of decreasing the amount that he might be liable to pay for his accommodation” Regulation 25(1) NAARR
According to Local Authority regulation, the deprivation rule can still apply if reducing liability was not the sole or main purpose of the deprivation. It is sufficient if it was a significant purpose.
Wills
“All to spouse absolutely” wills do not offer any protection against care fees means testing.
The deprivation rules do not apply to will planning because the survivor has not deprived himself of assets belonging to the deceased.
A severance of joint tenancy is a change of ownership rather than giving
property away.
Will trusts are, and remain, a robust form of planning for clients which might include:
• life interest of the first owner to die’s share of the family home
• Flexible life interest of the whole of the estate of the first to die
• Discretionary trusts
If the deceased’s share of the family home is on trust for the survivor, it will not be treated as part of the capital of the survivor. The survivor’s own share does form part of his or her capital for means testing. However the value of his or her own share will usually be worth much less than the 50% of the whole assuming 50/50 ownership.
Flexible life interest of the whole estate of first parent to die provides
protection for both their home and capital of the first to die.
There will be powers to advance or lend capital to the survivor.
However will planning will not work in the unlikely event if both require
domiciliary care before one parent has died.
Conclusion
Whilst the proposed changes improve client’s financial protection, care fees can have a significant impact on clients’ estates.
Will trusts, together with trusts for life assurance, pension death benefits, qualifying business and agricultural property are disregarded for care fees.
They also ensure that these assets are kept in the family for future
generations.
