For many years, Long Term Care & Capacity have been pressing issues for families with frail and elderly parents. Despite abundant information, many families remain unprepared, struggling to navigate the costs and strict regulations when care is needed. Why is this the case?
The Reality
Most people prefer not to think about their parents requiring care, promising to look after them without fully understanding the pressures and time involved. Many assume they will have the right to make decisions for their parents, financially and otherwise, without realising the complexities and legal constraints. When care becomes necessary, families often face the shocking cost and the reality that their parents’ assets are at risk before any Will takes effect.
Currently, the average cost of care is around £60,000 per year, with many care homes charging even more. If you have assets exceeding £23,250 (including property), you must self-fund your care. Local authorities only step in when assets fall below £23,250, and they will cover the full cost only when assets drop to £14,250.
The Reaction
Most families react to care needs only when they arise, leaving no time for planning. Local authorities will reclaim any assets transferred to avoid paying for care. The misconception that assets gifted away and survived for seven years are safe from local authorities is false. The seven-year rule applies to Inheritance Tax, not care costs. Under the local authorities’ ‘Deprivation of Assets Rule,’ there are no time limits on how far back they can go to reclaim gifted assets made to avoid care expenses.
The Realisation
Families soon realise that within a few years, all the money and property their parents worked for can be depleted, leaving just enough to cover funeral costs and a few bills. The belief that a Will safeguards these assets is misplaced; Wills only distribute what remains after death. Care costs impact the estate while the parent is alive, directly affecting what is left to be distributed.
The Solution: Planning
For over 20 years, Foresight has provided estate planning services to protect clients’ estates against life’s social challenges, ensuring there is an estate to leave via the Will. We offer Property Protection and Lasting Powers of Attorney to every client, ensuring children have authority over parents’ decisions if they lack capacity and limiting what local authorities can assess for care. With specialist Care Plans through our sister company, we help most home-owning clients fund care costs from income alone, protecting their capital for their children.
The Urgency
On such an emotive subject as care, especially at a difficult time, planning for the worst while hoping for the best is essential. Many families express regret that they didn’t take action sooner, often due to assumptions and last-minute decisions. Estate Planning requires the acknowledgment that care, capacity, and health are integral parts of life. If these subjects are a concern, it demands immediate action. The difference between proactive planning and reactive decisions can determine whether there is an inheritance or not.
Estate Planning isn’t about you; it’s about those left behind and those who have to manage once you’re gone. Whether there will be anything to leave depends on the planning you undertake now. Urgent action is necessary, plan today to protect tomorrow.