Planning ahead is key

We are an ageing population and it stands to reason that more and more of us are likely to need long term care.However, with so many calls on our savings these days, few of us actually think about planning for that eventuality. I've recently been advising a number of families on ways to fund care costs for their elderly relatives - helping them to understand the somewhat complex rules.

Despite it being one of the more punitive ‘taxes' around (currently 100% charged on assets over £23,250) most people I see are not fully aware of the rules, or indeed the costs, around paying for long term care. So, when they are faced with a potential weekly bill of £1,000, for example, to say it comes as a shock is an understatement.

When someone is going into care, or has gone into care - and it is not by their own choice -there are two assessments that should be carried out:

• A Financial Assessment
• A Care Needs Assessment

The first is the one that becomes quickly apparent to most. The local authority will advise that if your assets (possibly including your house if no one else lives there) are valued above £23,250, you will be expected to fund any care costs yourself until the assets are reduced to this level and you will still be expected to contribute towards some of the cost until they are reduced further to £14,250.

But if you qualify under the latter assessment, your financial situation could be irrelevant.
If the primary need for care is a health-related, then the NHS may fund the total cost of care. In this instance, you may lose the right to choose which care home is selected, as this will be decided by the local authority. While it is NHS funded, it is still the local authority which holds the budget, so it can be a bit of a postcode lottery - but this may be preferable to paying say, £1,000 per week.

As you can imagine, the latter is becoming increasingly hard to obtain as government budgets across the board are being slashed. As such, many will simply be declined as only the most severe cases obtain approval.

Speaking to a solicitor recently, he said it was, sadly, more likely to obtain the funding by fighting for it after the death of the person in care. This is probably because, in this situation, the cost of care is then known to the NHS/local authority whereas, in the beginning, when someone enters care, it is not.In the end it makes long term care a topic that will continue to dominate people's lives as they get older and exploring all of your options makes sense. As I said to a group of teachers the other day, you would not advise your students to leave it until the day before their exam to worry whether they had thoroughly revised their subject - so why wait until care is required before seeking advice?

Kieron Robertson is a Chartered Financial Planner for Valiant Financial Consultants (which has offices in Orpington and Tunbridge Wells). He focuses on the approaching or at retirement market and is qualified to provide advice on estate planning (inheritance tax and trusts), long-term care fees planning, savings/investments planning, retirement planning (funding for and income in) and lifetime mortgages. Kieron 07711 329256  kieron.robertson@ valiant-ifa.co.uk