Long Term Care, Care Asset Protection Bond, Inheritance Tax
The introduction of the NHS and community Care Act (NHS & CCA 1990) has considerable
implications for you and your family, particularly in the funding of these services. Social Services can take control of 100% of your assets, in excess of a specified minimum value, to pay for the cost of care.
Statistics show that one in five over 60’s require community care. Above the age of 70, the figure rises to two in five and above the age of 75 this rises more steeply to three in five. In a publication published 3rd December 1999 on Long Term Care, following a Government debate, it was stated that up to 3,000,000† people should act now to protect themselves through Long Term Care.
(†National population projections for the UK, 1996 based, ONS states
that there are 9.25 million people over the age of 65).
Currently, 70% of the Long Term Care bills in residential and nursing homes, are picked up by the Government, so we estimate, that 30% of the elderly population, will if the need arises, have to pay for their own care. It is therefore prudent to consider some form of insurance to meet the costs of home help, meals on wheels, residential or nursing care. We can assist with this area of concern, to give peace of mind and control back to you and your family.
FUNDING OF CARE FEES
If you have savings or capital (this may include the value of your home) of more than £20,500 (under current legislation 2005/06), you will receive no support from the state towards your care fees. We will assist you with confidential advice on the best way of paying for care, whilst at the same time protecting your life’s savings.
Our Independent Financial Advisers will prepare a free report tailored to meet your requirements. They will then recommend a choice of different solutions to help pay for your care needs and provide expert, independent advice on care fee payment plans and investments.
Also our advisers will provide guidance on how to protect your savings, assets and insurance policies, enabling you to achieve your objectives whilst leaving an inheritance if you wish.
These can be used to organise your estate in a way that would most benefit you and your family and are particularly useful when considering Inheritance Tax planning.
As part of our comprehensive service to you, we are able to provide the very best advice to you and your family, giving that feeling of comfort and security in the knowledge that everything has been organised in advance.
- 95,000 people a year need Long Term Care for the first time.†
- 70,000 homes sold every year to pay for Long Term Care: £4.5 billion.†
- 1,000,000 people will need continuous Long Term Care by 2031.†
†Source: Age Concern Financial Planning
And Laing & Bouisson 2000 Long Term Care Conference.
THE LONG TERM CARE PROBLEM
- Section 47 of the Community Care Act.
- Local government broadly speaking only starts to meet the cost of care for you if you have assets of less than £20,500 under current legislation 2005/06.
- So if your Estate exceeds £20,500 then you will have to pay for your own care.
- Deprivation of Assets.
WHAT THIS MEANS NOW
70,000 people sold their homes in 2002 to enable them to pay for their Long Term Care.
Reasonable (not Five Star) care costs an average of £450 Per Week or £23,400 per annum.
You may have planned to pass on your assets to your children and grandchildren. In many cases this may become impossible as the majority of those assets may be used to meet care fees.
WHAT THIS MEANS TO YOU
Inheritance Tax is only 40% (In excess of £275,000 2005 / 06)
Long Term Care (Tax?) 100%
- “I do not need to plan for Long Term Care because I am very wealthy and can afford to pay for it myself”
- You would need to invest £250,000 at 5.0% net return to get a return of £12,500 per annum! (assumes pension and benefit income of £12,500 per annum)†
- This asset can then not be gifted to heirs as it is needed to pay for care
- It will be eroded by inflation.
- On death it is liable for 40% Inheritance Tax (after allowances).
- If you have a partner, you will need to invest £500,000.
- “I will Purchase Long Term Care Cover when I need it…”
- Purchase Immediate Care Plan to provide income of £12,500 per annum.
- Cost of a single premium of approx £35,000 to £70,000†
†Source: TAILORMADE FINANCIAL PLANNING LIMITED March 2003
SOLUTION CASE STUDY
Arthur is 65 and has total assets of £280,000 he realises that although he has an annual pension income of £12,000 a friend recently entered care costing £23,000 a year and therefore he has an £11,000 shortfall should he need care.
Arthur’s solution was to invest £20,000 in a Care Asset Protection Bond, this guaranteed that his £11,000 shortfall would be paid for life should he ever need care. The Bond should refund his investment without Inheritance Tax liability on death.
THERE ARE THREE TYPES OF CLIENTS
Anyone Receiving Care
Immediate Care To Protect Assets
Anyone Planning Their Estate
Future Care To Protect Assets
Anyone Writing A Will
Future Care To Protect Assets