Back when I started my career, there were more options for preparing financially for long-term care costs than there are now. It used to be possible to take out insurance, known as long-term care insurance, so that if you needed care in future, the policy would pay out.
They were always very expensive and difficult to underwrite, but now there are no such plans available, and haven’t been for years. Those few insurers in that market quickly realised the risks were way too high, which would have made the plans prohibitively expensive. There are some immediate care plans available, which you can take out at the point of needing care.
Because of all this, planning options are now limited. If I had a tenner for every time someone has asked if they can give their house to their kids while still living in it, so that it’s technically “not theirs” when it’s time for a local authority career fees assessment, I could probably afford maybe a week of my own long-term care by now.
You Can't get Around Care Fees
Let’s clear up the point that there’s no clever plan that you can think up to get around the care fees funding system, that hasn’t already been thought about and shut down. If you give assets away to reduce your wealth, the Local Authority will just deem that you did so deliberately and you’ll have to prove otherwise.
And please, don’t be duped by adverts claiming to circumvent the rules. About five or six years ago I walked into our office building to see a poster advert that had been placed in the hallway by one of the other tenants, who was a will-writer and probate specialist. The advert headline screamed in massive letters: “Don’t Lose Your Home and Investments to Care Fees”.
I thought this was interesting so I invited the will-writer to lunch and asked her to explain the premise and the mechanics. I’m a specialist in trusts myself so we could talk turkey and get into the details.
Essentially the premise of the plan was a trust ostensibly set up for inheritance tax purposes but which removed assets from the client’s estate – simple enough, but it could possibly have the parallel benefit of removing assets from the care fees calculation as long as – and here’s the crucial point – you didn’t mention anywhere in the file that this was the plan all along.
She said this last bit in a kind of stage-whisper, all conspiratorial. I pointed out the irony that she had placed a massive advertising poster about avoiding paying for care fees, while suggesting to her client that they shush about that.
And I suggested that if the Local Authority just took a photo of her poster, they could probably undo all the work she’d done and make the clients pay for fees anyway, even though they had spent thousands setting up the trust, be responsible for their own care needs, and would no longer have the assets to pay the fees. All a complete screwup really, but there you go.
Leave a Reply