Updated 03 December 2020
If you end up needing long-term care, the chances are you will have to fund most or even all of it yourself. When the costs can potentially spiral and eat into any inheritance you plan to leave behind, planning in advance is essential. What are your options? Article by Armstrong Watson Financial Planning.
According to research by Friends Life, an estimated 1 in 4 people will require care later in life. However, both the level of care provided and the cost of providing it may vary greatly, and can even be dependent upon where you live.
The 2015 Care Act was made to support care in England (it does not cover Scotland, Wales or Northern Ireland), but certain elements of the legislation have yet to be implemented and have been put back to 2020. This includes the flagship policy to cap care costs at £72,000 for the over-65s (and younger adults with disabilities). The consequence of this is that anyone with assets over £23,250 (usually excluding their home) must pay all their own care costs.
For one in 10 people care costs can total more than £100,000 – not including other living costs such as food, bills and accommodation. As a result, the need to fund long-term care can seriously eat into your savings and also impact upon other areas for you and your family, such as the use of your home and any inheritance that you plan to leave behind.
It is therefore prudent to consider how you might cover such costs well in advance of having to do so – because when the time comes you may not have many alternatives.
So how could you pay for long-term care?
It’s worth repeating that most people who need long-term care will need to fund some or all of it themselves. Although some state benefits do exist in this area, you should not expect any or rely upon them unless you know you are eligible. Remember too that you cannot ‘make yourself eligible’ by disposing of assets to reduce your wealth before going into care – this is called ‘deliberate deprivation’ and local authorities will be looking out for it.
If you have concerns over funding for your own care, or that of another family member, then the most sensible first step is to seek professional advice. Long-term care is a highly specialised area, so search for financial adviser with the appropriate qualifications and experience using the Unbiased search.
Armstrong Watson Financial Planning Limited is the independent financial advisory division of Armstrong Watson, with offices across the North of England and South Scotland. The firm has extensive long-term care experience, and over 30 years’ experience of helping to develop business and personal financial strategies for a wide range of clients.
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