Long-term care planning
Our specialists have a long history of providing practical long-term care planning services to ensure that we meet the personal and financial objectives of our clients.
We look at a number of factors including the availability or entitlement of/to state benefits, your projected finances and the level of care required when advising on the most suitable level of care planning required.
What is long-term care planning?
Long-term care planning refers to the way in which you fund additional assistance in later life.
As we get older, we may require help whether this be in the form of family members at home or a residential setting providing domiciliary care. The cost of this is important as it ensures your projected finances cover the required care you need.
Care refers to the services that you or your loved ones will draw upon in order to provide this assistance in meeting their personal care needs both over the short and long term.
Services are provided by a range of bodies, local authorities, the NHS, private and voluntary organisations.
Why is planning important?
All good financial plans are centred on the basis that success later down the line requires you to start planning early, this more than ever rings true when planning for your long-term care. Earmarking funds for long term care or having an income strategy in place can help you safeguard as much of your capital as possible.
You can’t predict the future. The type of care you will require, the duration of your stay, the level of costs at the time and eligibility to state benefits are all changing variables that require ongoing reviews in order to help you keep on track.
The risk of running out of money, then requires the local authority to pay for your care with no guarantees that the same level of care can be maintained. This will also inhibit your ability to pass wealth down for future generations.
How much does care cost?
In England on average residency in a care home can cost between £34,060 to £48,724 per year. 1
It is important to consider that this cost can significantly depend on individual circumstances and regional differences. What seems like a postcode lottery can see you paying much more in the south for the same services offered in other parts of the country.
Costs unfortunately see no sign of letting up, with year on year increases rising above the UK rate of inflation, reaching almost 5% in 2018-19, the biggest spike in 10 years.
A common misconception is that the state will fund these costs, but in reality, only the few who meet strict eligibility criteria will avoid paying for it themselves. Many factors enter this equation such as how much capital you have and the value of your home, with limits changing year on year.
How to fund long-term care
Under the community care act 1993, local authorities are legally obliged to help with care fees for elderly people who do not have enough money to pay their own fees. In order to qualify for assistance, you currently need to have assets of less than £23,250 (£25,500 in Scotland, £24,000 in Wales and £23,250 in Northern Ireland). This limit does include the value of your home unless special circumstances are satisfied.
If your assets fall above this threshold there are many ways to fund your long-term care. The table below shows some of these options:
|Income||Income from your pensions, investments and rental properties|
|savings||Cash deposits, Cash ISA and National Savings|
|Property||Sale proceeds can be invested to generate an income stream|
|Family contribution||Your family may help you contribute to the costs of care|
Lifetime mortgage allows you to release equity from your home in the form of a lump sum accrued interest is repaid when you die or move into long term care (must be over the age of 55)
Home Reversion Plan is where your home is sold to a company for lump sum. Must be over the age of 65. Both allow you to continue to live in your home under certain guidelines. This method can only be used to help fund care at home and can be a useful way to fund any home modifications. Equity release arrangements require you to repay the loan in full when you permanently move into a care home.
LaingBuisson for its Care of Older People UK market report, 30th edition, published December 2019
If you would like to know more about how we can help you with our independent long-term care planning services speak to an adviser today.