"Old age is like everything else. To make a success
of it, you've got to start young"
Advances in medical science mean the prospect of us living into old age have increased greatly. While this provides the chance to spend more time with our loved ones, it also means that a growing number of people in the 60-80 age group are facing the prospect of the need for long term residential care in the immediate or near future.
Having to undertake such a difficult task with such urgency leaves little scope for any meaningful planning. It is therefore vital to prepare for the possibility of long term residential care at a time when you are best placed to do so - when you can actually make a difference.
Unfortunately, many people confuse the free personal care which everyone in Scotland over the age of 65 receives with long term residential care. Personal care at home is provided by the local authority after a social worker has assessed that care is required. Long term residential care is where personal care at home is no longer suitable and residential care with round the clock assistance is required.
While the personal care is provided free of charge, residential
care comes at a cost - which can be substantial.
The local authority decides how much of a contribution they will make towards this care by way of means testing. In basic terms, if you have assets over £25,000 (including your family home) then you are deemed to be "self-funding" and the local authority simply won't provide any assistance. Many people are left with little option but to sell their family home or cash in their savings in order to pay for their care.
The most considerate thing you can do for your family is to plan ahead and avoid a last minute scramble and indeed, there are a number of ways to reduce the overall impact that paying for care has on your assets.
There are for example a number of providers who can supply a Long Term Care Bond. This is where you invest a large sum of money in the hope it will grow and cover the cost of your care. However, there is no guarantee it will increase in value and your money is tied up for a very long time. They are also very expensive. Long Term Care Bonds are generally not considered to be the best method to provide for your care.
Many people gift assets to their children during their lifetime in the hope that having little or no assets at the time of going into long term care would force the local authority to pay for their care. While there may be method to this in theory, in practice case law supports the view of the local authority, that such a gift would be "deliberate deprivation" of your estate, and there are examples of where the local authority have charged property, pursued families for the cost of care and in admittedly rare circumstances even sequestrated. For this and a number of other reasons this route is also not considered to be the best to follow.
An Asset Protection Trust provides the best possible chance to
protect your assets from long term care costs.
Similar to gifting, you no longer own the asset and it is therefore not part of your estate at the time of going into long term care. However, provided certain legal rules are complied with, it may be possible to avoid the local authority pursuing the matter. The trust is very flexible- you may be surprised at just how flexible. It must be set up at a time when the need for long term care is not foreseen. The key is to start young and ensure everything is in place long before it is required.
Blair Cadell have a specialist team who provide advice
and assistance on the matters of long term care and you can have an
initial meeting with us at no cost. When you are considering the
impact of long term residential care on you and your loved ones,
old age really is like everything else, to make a success of it
you've got to start young!
Paul Hogarty, Solicitor, Blair Cadell Personal legal