Many of our clients contact us with concerns about having to fund future long term care.
As we grow older, our focus changes from saving to protecting. Whilst it is widely known that Inheritance Tax (IHT) can potentially take 40% of your assets (above your permitted allowances), less widely known is that funding long term care can potentially take all of your assets, including the value of your house. This leaves you with the lower limit of £14,250.00 to pass to your chosen beneficiaries.
The most recently published figures showed that in 2018, over 70,000 properties were sold to pay for the owners care.
Funding Care In Later Life: Your Options...
Can I transfer my property now to my chosen beneficiaries?
This is unlikely to work as it will fail the Local Authority’s “deliberate deprivation” test. If you make a gift/transfer a property purposely to protect it from future long term care assessment, the local authority will still treat you as owning that property when it comes to financial assessment.
In addition, if you have transferred your property to your children, and they subsequently divorce, or face bankruptcy proceedings, you will potentially lose your property.
If you are married or own property jointly with someone else, you could prepare “property protection trusts” in your Wills.
After ensuring that you own the property as ‘tenants in common’, the will of the first person to pass away gives the survivor the right to occupy their interest in the property. The will can state that on the death of the survivor, this half of the property will pass to their (the first person) chosen beneficiaries. If the survivor needs long term care, it would only be the survivors half share of the property that would be assessed.
However, these wills will only protect 50% of the property and only in the scenario of the survivor needing long term care. If both owners need long term care, these wills will not work as far as protecting assets is concerned.
If you are selling your house to move into long term care, you may be able to purchase an Immediate Needs Annuity.
These are currently offered by 3 companies, and will provide an annuity to cover the shortfall in your care costs for the rest of your life. The one-off upfront premium is based on your life expectancy.
Although expensive, they will provide your family with comfort, that you will never run out of funds to pay for your care. We are able to help in this respect and put you in touch with a specialist in this area. Contact us for more details.
With our help and expertise, you can set up a Family Protection Trust (FPT).
The trust can help in the following areas:
Avoidance of expensive Probate costs. When we die we will probably need a professional to deal with our Estate which can be an expensive, lengthy and time consuming process.
Sidewards Disinheritance. This is when beneficiaries (often children) don’t inherit their intended share of an estate due to remarriage.
Dependent Relative Claims. You may have a child or other relative that you do not wish to benefit.
Children inheriting at the wrong time. Sometimes our children will have problems that could not be foreseen, and inheriting at the wrong time could be disastrous. Whether it be a shaky marriage, addiction problems, financial problems or just having a vulnerable child. A Trust can help manage this.
Care Costs. Currently 1 in 3 women and 1 in 4 men over the age of 65 will need a degree of care. The Local Authority can take almost everything to pay for that care. The Family Protection Trust can help if you are concerned about long term care in the future. Early planning is always the best approach.
Protect what is yours & gain peace of mind for later life!
For a free, no obligation discussion about your long term care planning, please contact us at any time.