It is becoming increasingly common for people to worry about their future care needs. Not only can the rules about funding seem opaque and daunting, but the potential cost of care can seriously diminish the size of one’s estate, thus reducing the inheritance which children or other beneficiaries would otherwise have received.
When someone requires care, this can be organised by their local authority. If contacted, the local authority will perform a personal assessment of their needs, with a view to preparing a Care Plan. Once a Care Plan is in place, it is necessary to consider a Personal Budget, which is an assessment of how much it will cost to fulfil the needs identified. Finally, the local authority will undertake a means-test to work out how much they will need to personally contribute to their Care Plan.
Currently, everyone with more than £23,250 worth of capital (assets, savings and income) will have to fund all of their own care needs. If someone were to have less than £23,250 but more than £14,250 worth of capital, they would receive some help from the local authority. Only people with less than the £14,250 threshold will have all of their care needs met by the local authority.
The current system offers no safety net to protect people from losing almost all of their hard-earned savings in the provision of their care. In response to concerns about the current system, the Government announced new legislation, The Care Bill, which will:
- introduce a cap on care costs set at £72,000; and
- extend the upper limit for means-testing so that individuals with less than £123,000 will receive some financial assistance from the local authority.
There has been much press coverage about this topic in recent years but, unfortunately, although The Care Bill was due to come into force in April 2016, it has now been delayed until April 2020. The Care Bill will, therefore, be of scant comfort to people considering or needing care in the meantime.
Moreover, although The Care Bill will offer reassurance to many people upon its introduction, it is important to note that there will be exceptions to the cap of £72,000. Costs associated with gardeners or cleaners or ‘extras’ will not be included. What will have more of an impact, however, is that individuals will still have to contribute to their ‘general living costs’, with the anticipated contribution being £12,000 per year.
This means that even when The Care Bill is introduced the cost of care will remain a concern to many people. Sensible planning, however, can ensure that your estate is as protected as possible.
For further advice please contact our private client team who will happy to help.
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