Modern advances in health, hygiene and nutrition have made the prospect of living into old age a statistical likelihood; and most of us would like to know that when we start to lose our hair and the valentine's cards stop arriving in such vast numbers that we'll be able to have our needs taken care of. This can often mean long-term residential care, which involves quite a bit of organisation.
Those who have had to arrange care for an older relative - perhaps at short notice - will know that it can be a stressful time. People want the best for their family. Today it has become a necessity 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.
FREE PERSONAL CARE & LONG TERM RESIDENTIAL CARE
Many people confuse 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 personal care is provided free of charge, residential care comes at a cost - which can be substantial.
Your local authority will decide on how much of a contribution they will make towards this care by 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. 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 that 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.
ASSET PROTECTION TRUSTS
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 matters of long term care and you can have an initial meeting with us at no cost.
Contact Paul Hogarty, Associate. Blair Cadell Personal legal