As we get older, many of us worry about what will happen if we can no longer look after ourselves in our own homes. The prospect of moving to a care home or a nursing home often requires a lot of upheaval and can be hugely emotional for everyone involved.
The situation is often not helped by concerns over how such care will be funded. Care home fees can be expensive, and many people worry that paying for care will involve them having to sell their property or wipe out any savings they intended to pass on as inheritance.
With an ageing population and more people over the age of 65 needing 24-hour care, the issue will only become more relevant, and it is becoming increasingly important to plan how to finance any future care fee costs as early as possible.
In this blog, our Elderly and Vulnerable Clients solicitors look at care home fees and consider what you can do to protect your home and assets.
How much does care cost in the UK?
Care home fees vary and depend on several factors, including:
- Where you live.
- The type of care you need.
- The care home provider.
- Your savings and property.
The average weekly cost of living in a residential care home is £760 in the UK, while the average nursing home costs £960 per week, according to the care home review website carehome.co.uk.
Over the course of a month, these figures rise to an average of £3,290 for residential care, and an average of £4,160 per month for receiving nursing care in a care home.
Based on these figures, the average cost of a residential care home in the UK is almost £40,000 per annum, rising to around £50,000 each year if nursing care is required.
How much do you have to pay for your care?
The first step in working out how much you need to pay towards your care costs is a care needs assessment undertaken by your local council. This determines the kind of social care that would meet your needs, for example, adapting your property or moving into sheltered accommodation.
After the care needs assessment has been completed and a care and support plan has been agreed upon, there will be a financial assessment (also known as a ‘means test’). This is when your local council enquires about your finances, income, and assets, to work out how much you will contribute towards your care.
Under the current system, you must pay for your own care in a care home in England if you have assets worth more than £23,250.
If the assessment results in you requiring care in your own home, the £23,250 limit remains but no longer includes the value of your home.
If you have assets worth less than £23,250 but more than £14,250, you will be charged a proportion of your care costs on a sliding scale.
If an individual’s capital falls below £14,250, the state will pay for that person’s care and support needs, and the person does not need to contribute to that cost from their capital.
What are the options available to help with care home fees?
While the government is looking to introduce a new law that caps the amount that individuals need to pay for their lifetime care costs at £86,000, it is understandable that many of us have valid concerns about how we will pay for our personal care.
Several options are available to help with the cost of care home fees. These include:
- Making a financial gift. This option is usually one of the first people think of, but it should be approached carefully. If your local council decides you have intentionally reduced your assets to avoid paying care home fees, you may fall foul of the deprivation of assets rules. This means the council may consider the value of the gifts in its assessment, even if you no longer have them.
- Renting out your home. If you rent out your home, you can use the income this generates to fund your care fees.
- Care annuity. This form of insurance policy pays a regular lifetime income towards your care fees. There are two main types:
- Immediate needs annuity, whereby you pay a lump sum and buy the policy upfront to cover care funding now.
- Deferred annuity. This works in a similar way to an immediate needs annuity but involves delaying the payments to a time in the future. The longer the deferred period, the lower the cost of the plan.
- Deferred payment schemes. This is an agreement you make with your local council that lets you use the value of your home to help pay for care home costs. Fees are then paid back after you sell your home or after your death.
- Equity release. This enables you to access some of the money tied up in your home to help pay for care fees. If you are considering releasing equity on your home to boost your income or reinvest the capital, several options are available. Equity release schemes can prove extremely expensive due to the way interest is calculated and it is vital to do your homework before committing to a policy. You must also seek independent legal advice to ensure you fully understand what it involves and that your legal rights and assets are protected.
- Asset Protection Trust (APT). Also known as a home protection trust or wealth preservation trust, this is a way of no longer owning your property, though still maintaining rights over it. There are several types of APT, including Protective Property Trusts, Life Interest Trusts and Interest in Possession Trusts.
Every estate planning tool has advantages and disadvantages, and we recommend that you seek specialist legal advice if you are considering making any changes.
At Bookers & Bolton, our experienced elderly and vulnerable team will take the time to understand your situation, ensuring you understand your options and are comfortable with our advice.
Considering what you will do at an early stage and putting the relevant provisions in place is crucial for protecting your wealth.
Adequate forward planning will ensure that your assets are protected and give you the peace of mind you need.
Elderly Client Solicitors Alton and Hampshire
Bookers & Bolton provide a wide range of specialist legal services for elderly and vulnerable people, children, their relatives, and carers.
The elderly and vulnerable client team are always here to listen to your concerns and provide tailored legal solutions that are practical, cost effective, and in your best interests.
Issues affecting older and vulnerable clients can be complex and varied, and our private client lawyers in Alton and Hampshire can assist and advise in several areas, including:
- Power of Attorney.
- Court of Protection (including Deputyship, Gifting and Statutory Will Applications).
- Ongoing support and advice for Attorneys and Deputies.
- Mental Capacity Issues.
- Residential Care Issues.
- Property Issues.
- Funding in Care.
- Local Authority Assessments for Care.
- Continuing Care and NHS Care Home Funding.
- Financial Abuse.
- Vulnerable Adults and Children.