Care Costs & Protecting Your Assets
We’re all living longer and longterm care costs are significant. So, protecting your assets is something you should look at sooner rather than later.
Plan Ahead & Stay in Control
Amid other very serious issues, the government is still being lobbied hard to get to grips with funding the cost of care. However, not surprisingly, the introduction of a £72,000 cap on an individual’s contribution to care costs, recommended in 2011 by the Dilnot commission and supported by successive conservative PM’s and has been kicked into the long grass.
So, the prospect of families facing unlimited fees for longterm care, for the foreseeable, remains real and present.
Steps You Should Consider Now To Protect Your Assets
Make a Will
If you haven’t already got a Will, it’s a very good idea to make one. It may seem daunting at first but it’s a great relief when it’s been dealt with. If you already have one, make sure it’s up-to-date and reflects your current circumstances.
Think carefully about how you structure your Will. Leaving everything to your other half may not be the best option. The effect of a remarriage on surviving children should be considered too.
Draw up Lasting Powers of Attorney (LPAs)
Making an LPA well before ill health or loss of mental capacity becomes apparent, is critical. Those without an LPA are likely to face lengthy delays (and expense) whilst their family applies to Court for access to bank accounts, to pay bills and so on.
Consider Legacies & Gifts
Making a gift to family or friends whilst you’re alive is a good way to reduce the value of your estate for Inheritance Tax (IHT). Your loved ones also benefit immediately. There are benefits to leaving money to charity too. You’re not only supporting a worthy cause, but your gift or legacy can be of benefit tax-wise.
Pros and Cons of Trusts
Many believe that by simply transferring your property to your children before you die, you’ll avoid paying for care. This is not the case. Equally, if you arrange the transfer 7 years before you go into care, this doesn’t protect you either. The 7-year rule applies to Inheritance Tax, not the Local Authority care assessment procedure. However, if you’re looking to move all or part of your property or assets into a Trust when you’re fit and healthy and when going to go into a home isn’t even a remote possibility, then an Asset Trust may be an option. In the event of a surviving spouse remarrying, the use of a ‘Bloodline’ trust can avoid unnecessary argument and ensure your offspring get their fair share on your death.
Options for Rent/Equity Release
In certain circumstances, renting your home to pay for care makes sense. However, someone (probably a family member) needs to take responsibility for managing the property and you would need sufficient income/cash to fund any rental voids. Taking out a ‘Reverse Mortgage’ or ‘Equity Release’ can also provide a useful source of funding but this method is not without risk and should not be entered into lightly.
Please note that all views, comments or opinions expressed are for information only and do not constitute and should not be interpreted as being comprehensive or as giving legal advice. No one should seek to rely or act upon, or refrain from acting upon, the views, comments or opinions expressed herein without first obtaining specialist, professional or independent advice. While every effort has been made to ensure accuracy, Curtis Parkinson cannot be held liable for any errors, omissions or inaccuracies.