Long term care can be costly. Not everyone is eligible for local authority funding and many people have to pay towards the cost of their care in part or in full. Covering the cost can be difficult and often eats into personal savings and capital.
Many of us don’t think about long term care or plan for it, but unfortunately it is something that should be taken into consideration when planning our future finances.
When it comes to the point that long term care is needed whether for illness, disability or old age, the local authorities decide how much funding you are entitled to. This is based on your income, savings and capital. If the value is more than their threshold, then you may have to pay some or all of your care fees yourself.
Sometimes the value of your property is used in these calculations. Some people have to sell their home to pay for care and this is something we would all prefer to avoid.
Many people think that you can just transfer your investments or property title deeds into somebody else’s name to avoid using them against the cost of care. This is called deprivation of assets. Unfortunately doing this doesn’t mean those assets won’t be taken into consideration. If it is proven that you did this deliberately, to avoid those assets being considered in the means test, then the local authority may still include them.
There are many ways to fund long term care. Selling property is just one option. You may choose to downsize or rent your property out instead. You may opt for a deferred payment agreement. This means you don’t have to sell your house immediately but the local authority claims back the cost of your care when the house is eventually sold. You can also look at sale and rent back schemes or options for equity release. It is strongly recommended that you seek professional financial advice before choosing any of these options.
Other options include cashing in savings or shares, selling art, collectibles or antiques or claiming against insurance policies that cover long term care. You could also buy an immediate need care fee annuity; you invest a lump sum and in return you receive a guaranteed income for life to cover your care costs.
The best option is to make plans in advance so you can cover long term care if it becomes necessary. If you have a lot of investments, a valuable property and large pensions then it is likely you won’t be eligible for funding so it is worth looking at putting steps in place to cover the costs and protect the assets you want to leave for your loved ones.
An independent financial adviser will be able to explain all the options available whether you are self-funding your care already or need to put a plan in place. It is highly recommended that you seek professional advice before making any decisions to ensure that you are making the best decision for you.
At Rockwood we advise on all aspects of financial planning. When it comes to long term care we will look at your individual situation and help you make a plan based on your needs. We’ll look at what is affordable now and in the future, your care requirements, your attitude to risk and your financial priorities. We’ll advise you on the best options based on what you tell us. We are completely independent so you receive impartial advice. Call us today to find out more.
Nothing in this blog constitutes financial advice or recommendations, for more information please contact Rockwood Financial Solutions on 0330 332 2679.