Most funding is means-tested and in England, for example, local authorities do not typically provide financial assistance for anyone with capital over £23,250 (and if you’re looking for residential care, this will include the value of your home if you live there alone).
There is some non-means tested support available in certain circumstances, but it is limited.
Assuming your clients have assets over £23,250, they will probably be liable for the full cost of their care, so how much should they expect this to be?
Care options vary hugely of course, from assisted living to care at home and residential care, but to give you an idea, two hours of care at home per day could cost around £18,000 per year and residential care can cost over £65,000 annually.
This means financial preparation for care needs to be considered early on and not just by the elderly.
And importantly, people need to retain access to their money. We see many people who have prepared for legacy planning, resulting in funds being tied up in trusts, or families who have gifted money to their children and need to ask for it to be returned.
That is one of the reasons Business Relief (BR) Services are becoming increasingly popular, they can offer both investment growth and access to savings.
BR or Business property Relief (BPR) is a Government-approved provision, launched in 1976, that incentivises investment in certain types of trading companies.
Shares of BR trading companies that have been held for at least two years attract up to 100 per cent relief from inheritance tax when ownership of the shares is transferred to the beneficiaries upon death.
The second crucial area of planning is practical preparation. This is wide ranging, but her are some examples that advisers might want to consider.
- Have conversations within the family about the individual’s expectations and wishes
- Have a needs assessment carried out to see if there are any early steps that can be taken to prevent some of the issues we have stated as being a cause for care needs, for instance, falls or loneliness
- Consider the different types of care available and if residential might be an option, research and select a preferred home. Many homes have long waiting lists and so joining this can give you far more choice in an emergency. You do not have to take up a place if it is not needed
All of these steps can contribute to a far better outcome for the individual and their loved ones. Having a contingency plan in case of emergency helps many people to stay in control of their situation and not need to make such hurried decisions, for instance when discharged from hospital.
That all sounds very simple, but with the challenge of a complicated system identified earlier, where should people start?
I wholeheartedly encourage people to engage with expert advice when it comes to preparing for care.
It is something we often deal with only once in our lifetime and the stakes are high, so it is important to get care right.
On average, people spend two and a half years in care and that is a significant amount of time if you, or your loved ones are unhappy with the choice.
Independent advice can help by including the whole family and supporting a plan that is truly tailored to their needs, rather than having to take the first option available.