With longer life expectancies and rising care home fees, many people are finding their savings are insufficient. A recent GMB union investigation has shown that at least 166,000 people in the UK are in social care debt.
This study revealed that more than 78,000 people have had debt management procedures started against them by their local authority. And in the past two years, more than 1,100 people have been taken to court for social care debt.
These figures are likely to increase along with the costs of social care. With average care home fees costing £29,270 a year, more people will be forced into debt as they try to cover the rising costs.
The GMB National Officer Sharon Wilde has argued the fact that as so many people have been taken to court, the system is failing. And, with over 400 court cases in two years, London is predictably the region with the worst social debt issues.
Current rules state that those with capital between £14,250 and £23,250 will receive some financial aid from their local authority. However, those with capital and savings over £23,250 have to cover all of their care home fees themselves. This is measured by a financial assessment called a means test.
|Your capital||What you have to pay|
|Under £14,250||None of your care home fees (the local authority will pay them and your capital will be ignored by the means test – but they will still look at your income)|
|Between £14,250 and £23,250||Some of your care home fees (the local authority must pay the rest)|
|Over £23,250||All of your care home fees (also known as self-funding)|
Without any later life plans in place, a local authority may use someone’s estate to help cover their care costs. This means they will have less control over their assets and their loved ones may receive less inheritance than they intended.
There are a few methods which can potentially protect your home from care fees. However, local authorities can still challenge your exemption if avoiding fees is clearly the purpose of your actions.
A Property Protection Trust can be written into both you and your partner’s Wills to protect your half of the property. In the future, if you and or your partner needed care, only one half of the home could be used for care costs.
With a Family Protection Trust, your assets are kept safe until the time comes for your loved ones to receive their inheritance. As your assets are in the Trust, they don’t form part of your capital and so may not be means tested.
An Equity Release plan allows you to borrow against the value of your property. This equity can then be used to pay for your care fees.
A deferred payment also lets you use the value of your home to pay for care fees. Once arranged, your local authority will pay for them. This will later be repaid from the sale of your home. You will be able to sell it at a time convenient to you, or after you pass away.
Your fees could also be covered by a payment plan, which is an insurance policy that pays a regular income towards care costs. This is taken out in return for a set premium.
Our experts can offer you advice and guidance on the right choice for you. If you want to know more about protecting your assets from care home fees, arrange a free consultation with us today. Contact us and achieve peace of mind.