LONG TERM CARE COSTS - CAN I PROTECT MY SAVINGS AND HOME?
When making a Will for our clients we are often asked “What can I do to protect my assets from the cost of nursing home fees?” Many of us know someone who has had to sell their family home or use their life savings to pay for their care in a nursing home. And at a rate of up to £700 per week (that’s equivalent to £36,400 per year) for nursing home care, the cost is very significant. This article explores this issue and what can be done to protect your assets so that you can pass them on to your family and loved ones.
With advances in medicine and healthier lifestyles we are living longer. Many of us will live well into our eighties and nineties and life expectancy rates are increasing all the time. There is also an increase in dementia (e.g. Alzheimer’s disease) meaning that more of us will need long term care towards the end of our life.
What are the rules?
The rules governing nursing home fees are set out in the Charging for Residential Accommodation Guide (known as CRAG). The CRAG document for Northern Ireland runs to 125 pages and the rules are complex. If you live alone and need to go into long term care, then your savings and your house are at risk. There is a lower limit of £14,250, so any savings or house value up to that amount cannot be used to pay for nursing home fees – but anything in excess of that amount can be used to fund your care. If your spouse still lives in your family home, the value of your home is disregarded, but savings are still taken into account.
Is there anything which can be done?
The short answer is: “Yes”. For married couples, it is important to arrange your savings and property in such a way that you protect your share of your assets from being taken into account, after your death, should your spouse need to go into long term care. It is possible to do this in a flexible way, so that your spouse is provided for after your death and can benefit from your share of joint savings and property etc., but keeping your assets ring-fenced so that they cannot be used to fund the surviving spouse’s nursing home fees. If you live alone, it is still possible to take certain steps to protect your assets. It is important to seek advice on this as soon as possible.
There are also various life insurance investment funds which are presently exempt from being taken into account for nursing home fees and these can be a very useful way of ring-fencing your savings.
When should I make arrangements to protect my property?
The short answer to this question is: “Now”. It is important to act sooner rather than later, due to the “deprivation of assets” rule which means that if you are deemed to have deliberately sought to transfer assets in order to avoid them being taken into account, such a transfer of assets can be disregarded and the asset recovered to fund nursing home fees.
This is a complex area of law, but there are relatively simple steps which can be taken to reduce the risks, all with a view to ensuring that you pass on your savings and assets to the next generation.
If you wish to discuss this in more detail in relation to your personal circumstances, please make an appointment to see Lewis Richards or Stephen Wilson who specialise in this area. They can be contacted on 028 2766 2118.