Planning Ahead for Care Costs
Wednesday, February 17th, 2010
Most of us tend to feel we are “indestructible” and we tend not to plan ahead for adverse life events. But thinking “It will never happen to me” isn’t a good reason for not taking basic steps to protect families and assets against adverse events occurring.
One issue which is affecting more and more families is the cost of residential care in old age. Care costs can come in at around £600 per week nowadays. Now that might represent extremely good value in that the care home resident is being fed, kept warm and being well looked after. All the costs of living at home have gone, of course, and that has to be borne in mind.
Still it is true that good value or not these costs are substantial – probably more than the cost of sending someone to an expensive boarding school. Not many of us could afford to send a family member to a boarding school – it would just be a non – starter financially. However, many families like it or not will have to face the fact that a family member may have to go into care and the money for that will have to come from somewhere.
That “somewhere “is often the property of the resident going into care and for many that means the person’s house. It is estimated that thousands of homes are sold to pay care home costs every year.
It seems a great pity that every year many families run into a care costs nightmare when with some forward planning this can be avoided. One method which can sometimes avoid a home being sold to pay for care costs is for the house to be placed in a Trust – variously called a Family Trust or Discretionary Trust or Asset Protection Trust. There are various potential advantages to a property being put into trust, and provided such a trust is not solely set up just to avoid care costs it is likely to work in doing just that.
The word “trust” sometimes scares people but the concept is actually quite simple. Basically the ownership of assets is vested in a group of people, “the trustees”, who hold and administer property and assets for “beneficiaries” under the trust.
One effect of these family trusts is that the assets in the trust should not be taken into account when a person is assessed for how much he or she must pay towards care costs. Consequently if someone has successfully put their house in a family trust it will not be sold to pay for care costs. Apart from trusts, depending on family circumstances there are other options also which may do the trick in avoiding care costs. There are lots of issues to be dealt with carefully here and it is vital that advice is taken.
Forward planning is required and decisions on a family trust or other options must be taken long before care costs are in contemplation. It is odd that, with care costs being so devastatingly expensive for most families and with illness and infirmity hitting not just the wealthy, more families do not take early steps to deal with the care costs issue.
Caesar and Howie offer a free consultation on care costs, discretionary trusts, and other relevant issues. Simply telephone 01506 815900 and ask to speak to Sarah Patrick or Ivor Klayman.
Terry Ann O’Donnell from Caesar and Howie ran the stall for two days. “The level of interest in what we are trying to say to people was just fantastic” said Terry. “Actually I was run off my feet and we completely ran out of leaflets twice and had to rush in new stocks. What struck me is that so many people just haven’t planned for the future because they just haven’t thought about things. Once you explain to them the benefits of taking, really the modest legal steps you need to protect families, they are keen to get on with getting them put in place. It is pretty frightening, mind you, to find out how few people know about Powers of Attorney for example. A lot of folk also had not really thought about the benefits of Equity Release, giving some extra cash in their later years. But hopefully, we managed over the two days to get the message over to lots of visitors at the show.”
