Can we get assistance to pay for long-term care?
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My father is increasingly in need of help and we think it is time he moved into a care home. My mother is worried that their savings will run out and she will have to sell the house if he is in care for a long time. I understand they can get state help once his assets decrease to a certain figure but will that include their house?
Jeremy Woodruff of Smith & Pinching responds:
Your Local Authority (LA) will help with care fees once your assets, savings and investments get down to a threshold. This currently stands at £23,250 in England (there are different thresholds for other parts of the UK). Once your wealth drops below £23,250, you may be expected to contribute to care costs from your income with the LA paying the rest.
In order to get LA support, your father would undergo a means test to establish his eligibility.
The good news is that while your mother is living in the house, it won’t be counted in the means test – provided they are still a couple when your father moves into a care home. It also wouldn’t be counted if the house was occupied by a relative age 60 or over or disabled, an estranged/divorced partner who is a lone parent, or a child under age 18 of the person needing care.
LA support is there to support those whose wealth does run out. However, it will only provide funding up to the LA’s rate for care so there is a danger that the home you select for your father may be too expensive at that point. You or other third parties may need to top up the support you get from them – or he may need to move.
I talk to many clients who are worried about the cumulative cost of long-term care. Recent figures from LaingBuisson (2020-21) show that the average cost of residential care in Suffolk is £944 per week – more than £49,000 per year.
There may be ways to limit the erosion of your parents’ wealth by changing their pensions, savings and investments to provide more income. It is also possible to ringfence the total expenditure with a special annuity known as an Immediate Care Plan. This is purchased using a capital amount and will deliver a top-up to pension income to provide care for the rest of the person’s life. It’s paid directly to the care provider so is tax-efficient as it isn’t counted as income for the individual.
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I suggest you and the family discuss your father’s care fees with a Chartered Financial Planner to ensure you understand how they can be managed.
Any opinions expressed in this article do not constitute advice. They assume the 2021/22 tax year and may be subject to change.
For more information, please visit www.smith-pinching.co.uk