While retirement can be an exciting time, with the opportunity to make travel plans and enjoy life without the stress of work, it is important to consider how residential care fees might impact on your estate in later life.
A significant number of us will require full-time care at some point in the future. According to a 2017 census, over 31,000 elderly residents were living in care homes in Scotland. This does not come cheap, with the cost of care regularly exceeding £40,000 per year, depending on the level of care required. It is therefore important to consider what financial arrangements you have in place to be able to afford the level of care you would need, and the rules which determine how much you would be liable to pay.
If you have been assessed as requiring social care, you will be assessed to determine how your care will be funded. The receipt of any benefit for care home fees is means-tested based on your income, savings, and value of your home (if it is owned by you). From Monday 8 April 2019, the upper capital limit is £28,000, meaning that if you have capital assets over £28,000, you must be self-funded.
While this is a relatively low limit, many of those who have to go into permanent residential care have the majority of their savings tied up in the value of their home. In the unfortunate event that insufficient savings are held separately from the value of the home, the property may have to be sold to cover care fees. However, there are circumstances in which your house will not be included in the financial assessment.
Making gifts in later life can be an effective means of reducing your exposure to inheritance. However, that value of these gifts must be carefully calculated to ensure that you retain sufficient assets to meet your possible future care fees.
If significant gifts have been made prior to entering care, and you are left unable to self fund, the local council has the right to include the value of these gifts in their financial assessment. There are no time limits applicable to this, meaning any gifts can be considered. This is intended to prevent those who may be in future need of care 'deliberately depredating' their assets, with the effect of putting the burden of meeting the cost of their care onto the local authority.
It is vital to have a plan in place to cover you for future potential care costs. Professional advice should be taken before you decide to make significant gifts, preferably at a time when you are fit and well, and there is no contemplation that you might soon enter long-term care. Please contact us to start planning for your future today.
At Murray Beith Murray, we’re more than just lawyers - we’re trusted advisors. We clearly outline the implications from initial contact, helping to dispel the mystery behind the law and legal process. Our highly personal service reflects our culture, which is centred on integrity and trust, and the expert guidance we provide has been designed to be an investment, not an expense. For more information, please contact us today.