The need for appropriate care and advice is becoming increasingly apparent and learning to negotiate the long term care maze sooner rather than later will be essential.
There are a number of planning issues that can help to ease the transition into later life and long term care, some of which are outlined below. Negotiating the maze of organisations, assessments, and benefits can prove daunting and specialist advice can be invaluable.
State entitlements are based on need before means
When considering care for you or a loved one, ensure you are receiving all state entitlements you are eligible for – some benefits such as Attendance Allowance are not means tested and are also not taxable.
Where a person has difficulty with everyday activities, such as washing, eating, dressing or managing their home, the Local Authority is obliged to assess their needs. Such an assessment is based on need, not on how much money the person has. Only once a needs assessment has been completed should a financial assessment be made.
Where a person has a complex medical condition or requires specialist nursing care, NHS Continuing Care or NHS Funded Nursing Care may be available. If funding is denied because there is no primary health need, a review can be requested at a later date if health deteriorates.
How your financial assets are assessed
Local Authority funding will generally not be available if the person needing care has savings of £23,250 or more. However, life assurance bonds are excluded from this calculation, as is the value of the home in some circumstances.
The value of a person’s home will be disregarded for means testing where it continues to be occupied by, for example, a spouse or a family member aged over 60, under 18, or who is incapacitated.Local Authorities also have the discretion to disregard the value of the home where it is the sole residence of someone who has given up their own home in order to care for the person now entering a care home. Such discretion must be balanced with the need to ensure that care home residents with assets are not maintained at public expense. Given the current squeeze on Local Authority funding, it is likely such discretion would only be exercised in extreme cases, if at all.
In means testing for Local Authority care funding, assets held jointly will be divided equally amongst all the owners irrespective of how much each has individually contributed. Therefore, assets held jointly by husband and wife will be split 50 / 50 whereas assets of a married couple held solely in one name will only be assessed on that person.
Plan your assets – but stay within the law
Business assets will be taken into account in determining eligibility for Local Authority care funding. Where an individual is still working in a business, even if involvement is minimal, the value of their share in the business is likely to be taken into account. Forward planning in family businesses can alleviate this issue.
Assets gifted into trust can also fall outside means testing; however, this requires detailed expert advice from a lawyer suitably qualified and experienced in this field.
Overriding the potential planning opportunities outlined above are the Deliberate Deprivation Rules under which a Local Authority can treat a care home resident as still possessing an asset if the Local Authority can prove that deliberate deprivation was a significant motive for the transfer of the asset to another party.
Timing and motive are two key issues the Local Authority will take into account when assessing whether deliberate deprivation can be proved. Any assets gifted or transferred within 6 months of a person entering care can be recovered by the Local Authority. If more than 6 months have elapsed between the gift or transfer of assets and the need for care funding, the Local Authority will not have the power of recovery; however, they can still take the value of the asset into account, which could result in a refusal to fund the care resident or to treat any funding as an accruing debt owed to the Authority. Ultimately, the Local Authority could resort to the Insolvency Act to pursue the debt owed and a Court could in theory set aside any transfer or gift if it had been carried out to defraud existing or future creditors.
There is no foolproof way of avoiding care funding. Some Local Authorities pursue action more vigorously than others and anti-avoidance measures may be applied retrospectively. It is therefore a dangerous game to deplete assets on the assumption that Local Authority funding will be provided.
Who will make decisions for you if you’re unable to?
Ensure a Lasting Power of Attorney (LPA) has been drawn up. The appointed Attorney is the person who will be responsible for making decisions on behalf of the individual and it is important that they understand the steps that will need to be taken if and when the LPA needs to be put into effect.
The Dilnot report has brought increased focus on the issue of long term care in the UK. With an ageing population the need for a sustainable solution is evident; but with a debt overhang set to last for many years to come, the availability of State resources will be scarce leaving the burden firmly with the individual. Professional advice from a qualified Later Life Adviser will provide the guidance needed and ensure a secure future that can be maintained for life