Tag: care fees | Wills Jacobsen

Care fees charges – a brief explanation

As we become older we are often less able to look after ourselves. It is predicted that as many as 75% of us will need some form of long term care in the future.

If we have assets in excess of defined care fees thresholds, we will be expected to either meet the full costs of our care or contribute towards it.

Many parts of the Care Act, implemented following the Dilnot report, have now been shelved, meaning there is no cap on care costs. If you require care and have assets of more than £23,250 you will be required to pay the full costs of that care.

If you have assets between £14,250 and £23,250 you will be expected to contribute £1 per week for every £250 of capital between these two limits as well as your income, less a small weekly allowance of £24.40 for you to spend.

The average weekly care fees cost in this area is £650.

If your care is provided in a residential setting rather than in your home, you will be subject to the above rules for fees assessment. Your home will be disregarded from assessment if your spouse, partner, or another eligible person lives there. However, if you live alone then the full value of your home will be taken into consideration and very likely will need to be sold to pay your care fees.

If you require some residential care and some nursing care the NHS must pay for the nursing care element. There is an assessment to qualify for this and a flat rate is given if you are successful. For the year 2016/17 the flat rate is £156.25 per week.

The NHS is only responsible for fully funding your care if your primary need for being in care is health based. This is called NHS continuing care and is a controversial area as the definition of what qualifies for NHS continuing care varies from area to area and is the subject of numerous court cases.

For more help an advice get in touch.

Protecting your assets & preserving your wealth

If you want to safeguard your assets for your family, it is important to make sure you put as much protection in place as possible whilst you are still able to do so. However, whilst you are alive it is important that you have full access to, and use of your assets, so that your quality of life is not jeopardised. This is particularly important during your retirement when your ability to replace capital is significantly reduced.

Effective planning does not involve you giving everything away or putting your own financial security at risk for the benefit of your family. Instead it is about giving you the peace of mind of knowing that whatever happens in the future, you or those you trust will remain in control of your assets and you will not lose them to the state.

Consider the following questions:

How much of your estate would you be prepared to lose to pay for long term care fees?
Who would you trust to look after your affairs if you could not look after them yourself?
Would you be happy for your children and grandchildren to lose 40% of your estate in Inheritance Tax?
How would you feel if your assets ended up in the hands of someone you have never met?
What would happen to their inheritance if one of your children divorced after your death?
Do you want to leave the financial security of you and your family to the roll of a dice

Using trusts to protect your assets

For around 900 years the wealthy have used trusts to protect their assets for their family. A trust is a legal concept that started in the Crusades and has developed over the centuries to become a robust mechanism used worldwide.

Trust are now a very important part of everyday life. Your pension is a trust, every charity is a trust, some schools and hospitals are trusts and every new parent now has access to a child trust fund for their new born.

A trust has the benefit of simply putting a legal barrier between your trust assets and everyone other than your chosen beneficiaries. By naming your bloodline (or anyone else you wish to benefit) as the beneficiaries of your trust, you guarantee that the rest of the world will not be able to share in the trust’s assets.

If you use a trust to protect assets you are able to specify how and when your chosen beneficiaries receive a benefit from your estate. You can impose restrictions, conditions or time limits on gifts. This can be of enormous benefit to the long term security of your loved ones.

For example:

If you leave money outright under your Will to your son or daughter who is in the middle of a divorce, this will be a very nice windfall to his or her estranged spouse
Leaving your estate outright in your Will to your spouse who then goes into care, is a very nice windfall for the local authority
Leaving a sum of money in your Will to your grandchild at 18 who falls in with the wrong crowd could see it disappear within days of your death
Leaving a sum of money outright to a disabled beneficiary in your Will, means they could lose all of their means tested benefits

By making the above gifts via a trust you will be able to:

protect your son/daughter from losing their Inheritance
reduce the risk of losing your entire estate to the Local Authority in care fees
delay the gift to your grandson until he is responsible enough to appreciate it
protect the benefits of your disabled beneficiary

The wealthy learned many years ago that if they wanted to protect their bloodline they needed to put the correct documentation in place. Over the generations they have written the rules that guarantee wealth can pass down through their generations safe from divorce, remarriage, illness and tax.

These same rules can protect you and your family and give you the satisfaction of knowing that you have done the very best for them.

Want more information? Get in touch or come to our FREE seminar. Call us to book your place.

Its all a matter of trust

Trusts are a great way to help protect your loved ones, either in your lifetime, or after you have died. Trusts can ensure your loved ones are provided for in the future. Trust funds have many uses and are set up for many reasons. The most common are:

To protect assets – so they cannot be used to pay for care home fees
To guarantee an income for loved ones – providing financial stability for their future
To help to avoid inheritance tax – ensuring money, shares and property are passed on in the most tax efficient way
To declare different interests in property – where two or more people have paid different amounts when purchasing
To provide for future generations – so that grandchildren and great grandchildren can benefit
To provide for vulnerable beneficiaries – so that their means tested benefits are not affected

As well as protecting assets such as property, money and shares, trusts can help provide for a family’s future. Many people consider setting up a trust to safeguard their assets if their chosen beneficiary is either:

Too young to inherit – the beneficiary cannot inherit until they reach the age of 18
A spendthrift – If the person is not great with looking after money, any gift can be put into a trust and they can receive a gradual income from it.

For the vast majority of people their home is their main asset and they want to ensure that as much of it as possible passes to their children. Care home fees are a particular worry for many people. The current care fees regime means that should a person need to go into care, the Local Authority will assess that persons income and capital resources to determine whether they should contribute to the costs of their care. If their capital assets are more than (currently) £23,250 they have to pay the full costs of their care.

In view of this, the most popular type of trust we encounter is a Property Protection Will Trust. This trusts provides a flexible way of allowing a surviving spouse to live in a property after the death of the first spouse, whilst preserving the deceased’s share of the property from care fees so it can pass to the children of the family.

Setting up trusts can be a complicated process, but trusts do have great benefits provided that the right trust is chosen. You should always seek the help of your legal advisor in setting up a trust as are there are different tax rules which can apply, depending on which trust you opt for.

We can fully advise you about all trusts and which trust would be best for you to preserve your assets & wealth for your loved ones. We offer a fixed fee asset & wealth review for this purpose and we have lots of free information about the different types of trust that are available on our website.