Protection of assets against care home fees remains a hot topic and a pressing concern for many. Blanchards Bailey Partner and Head of Private Client, Jerome Dodge, gives his views on the recent government announcements.
“Proposals to put a lifetime cap on the amount an individual has to pay towards their long- term care are surely a step forward on the basis that state provision of social care has been underfunded for many years. However, plans to impose an £86,000 cap on care costs are more complex than they first appear and there is a question mark as to how much extra funding is actually being provided. It should be noted that the cap does not apply to “hotel costs” e.g. accommodation, food etc. Where does this leave the two vehicles commonly used to provide protection against care home fees?
Wills made by couples can usually ringfence half of the assets from care home fees It is perfectly possible for Wills to be made by a couple in which the assets of the first person to die are placed into trust to allow the survivor
a guaranteed right to occupy the main residence, receive income from other assets and ensure the capital value of the assets in trust cannot be taken into account by the Local Authority should the survivor need long term care. Due to the cap, it would seem that this protection will be beneficial in fewer cases, but it is important to factor in the ‘hotel costs’ in assessing whether such protection is still of practical benefit for any particular couple. It is also worth bearing in mind only care costs incurred after October 2023 benefit from the cap.
Health and Care (Welfare) Lasting Powers of Attorney (H&W LPA)
If you do not have a H&W LPA, decisions regarding social care (e.g. whether you are looked after at home or move into a care home) are made by the state and not your family, should you lack the mental capacity to make that decision yourself. These documents have become very important in recent years and the proposed changes to the funding of social care make them even more vital. A H&W LPA gives those you love and trust, the legal authority to insist on the care you are entitled to if at the time you lack the required mental capacity. I think it will also become crucial that as people reach the cap in their personal contribution towards funding, that the decision as to whether care is provided by the state, (which is usually of a lower standard than the private sector provides), or continues being provided privately, is made by those you have appointed, rather than the Local Authority. A H&W LPA not only puts the decision making in the hands of the right people, but allows you to document your wishes in this regard and gives authority for them to be carried out.
Jerome Dodge would advise all clients to consider the following Estate Planning and Asset Protection Checklist:
- Has your will been reviewed in light of Inheritance Tax changes and particularly the introduction of the Residence Nil Rate Band?
- If you are a couple, have you considered trusts to protect assets from care home fees? Lasting Powers of Attorney (‘LPAs’)
- Do you have Health and Care (Welfare) LPAs?
- Does your Enduring Power of Attorney/Financial Affairs LPA include the ability for the attorneys to instruct
a broker/Independent financial advisor on adiscretionary management basis? If not, this is something you should discuss with us.
Inheritance Tax planning
• Do you understand your Inheritance Tax position, and have you recently reviewed the options available to you to mitigate tax?
• Have you received advice on your private pension and ensured it fits in with your estate/Inheritance Tax plan?
We are always very happy to have an initial discussion with current or prospective clients free of charge to see how best we can help. To speak with Jerome or any member of the Wills and Estate Planning team please contact 01258 459361.