CARE FEES
Funding Long Term Care Fees is a bigger financial
threat to most estates than Inheritance Tax.
While Inheritance Tax can never take more than 40%
of an estate, Long Term Care Fees can consume 100%.
It is standard practice for local authorities to take and sell the family home to cover the cost of Care Fees. It is estimated that 70,000 homes are sold every year to fund long term care.
Long Term Care is not regarded as “medical care”, so you have to pay for this personally rather than receiving it through the NHS.
A quick bit of internet research shows that, in our area, nursing home fees are at least £56,000 a year. In a recent BUPA survey one person spent over 20 years in a care home.
90 Year Old Loses His House
In one recently reported example, neighbours of a 90 year old man rang social services because they knew he was living on his own and they had not seen him out and about recently. When social services arrived they did not find any particular medical problems but arranged for him to go into care for an assessment just in case.
The initial assessment did not find any major problems either, but it nevertheless turned into a 9 months stay in a care home.
During the first 12 weeks in care the Local Authority paid for this, but after that they put a charge on the man’s house.
By the time the man left the care home his house had been sold to pay the cost of the care fees. He had lost his home, and had to buy a greatly downgraded home in an area where he knew nobody.
This man would not have lost his home if he had taken the right action in advance to protect it.
Mother Leaves Non-existent House to Daughter
Laura Osborne had a house and a small amount of cash in the bank.
As Laura got older and more frail, her daughter, Georgina gave up her job to look after her mother. Her son, Mark, continued working and did not do anything to help his mother and sister.
Laura wanted to show her gratitude towards her daughter for her sacrifice, and so wrote a new Will giving Laura the house and Mark the small amount of cash. She felt this was very fair, given all that Laura had given up for her sake. She did not discuss this with an experienced estate planner, who would have advised her of the potentially disastrous consequences of her decision, but simply gave these instructions to her solicitor, who followed them exactly as given.
In the fullness of time, Laura developed dementia. Georgina could no longer look after her, so Laura went into a nursing home. The local authority insisted Laura’s house was sold to pay for her nursing care.
When Laura passed away she no longer had a house, but the balance of the sale proceeds after care costs was in her bank account.
According to the Will, Georgina would get the house (which no longer existed), and Mark would get all the cash (which was now Laura’s entire estate).
So Mark got everything and Georgina got nothing. Knowing that had his mum not gone into care and had to sell her house he would have got virtually nothing, Mark felt no obligation to put things right and help his sister. He kept everything for himself.
Clearly this was a very different result from what Laura had intended.
With proper estate planning put in place before the problem arises you can substantially or completely remove the threat of Care Fees decimating your estate.