The cost of care at home could be less than you think, especially if you only need a small amount of help each week, and the costs can often be met out of normal income, pensions and allowances.
If you are likely to require more comprehensive personal care services over a longer period of time, you should get a care needs assessment from your local authority to see if you are entitled to funding. If you are not entitled to claim the cost from the local authority, or if the local authority can only fund a limited amount of your care, there are several options to consider. In certain cases where continuing care is appropriate, NHS funding may cover the cost.
For many people, their main asset is usually the family home, and with the receipt of pensions, benefits and other income, it is often the case that you can save money by having care services at home instead of the last resort of going into residential care, as payment for residential services is assessed differently. If do not have sufficient funds and you wish to continue living at home you may also have to consider alternative funding options, such as equity release and annuity based schemes.
Many different financing schemes are available to fund your care and nursing; each scheme needs to be tailored to your specific financial circumstances and you should take proper independent advice, ideally from a SOLLA qualified advisor.
Inheritance Tax Planning
Inheritance Tax mitigation can be an important area of financial planning in general and can be used in conjunction with care fees planning. This could reduce the amount of tax your estate may ultimately be liable for if your home and other assets are worth more than £325,000. Any assets above this amount will be subject to inheritance tax of 40%. Your children and future beneficiaries of your estate should be included in any discussions and legal arrangements on care funding.
Care Fees Annuities
Another option to look at is an Immediate Needs Annuity also known as a Care Fees Annuity. These annuities are designed to provide a guaranteed regular and tax-free income to meet the cost of care by paying a one-off lump sum to purchase the plan.
The lump sum will depend on the following:
- Your age
- Your medical history and current health
- The amount of income required to cover the short fall in funding the care fees
It is important that the payments are made directly to a registered care provider as they will normally be tax-free, thereby increasing the amount or standard of care available to you. This is paid for the rest of your life. If you receive the annuity payment directly, it can be subject to tax, even if you use it to pay for care.
The cost of care has been increasing as a result of inflation. You can protect against inflation by requesting a plan that provides for an increasing income.
Care fees annuities can be structured to protect a proportion of the initial capital outlay although this usually comes at additional cost.
We would like to acknowledge the support of specialist long term care funding advisors Baker Jenness Financial Management in the preparation of this information. www.bakerjenness.co.uk