According to recent media reports, the cost of care home fees increased 5.6% last year to an average of £30,000 per annum. That’s ten times the rise in pensioners’ income in the same period.
Care home fee planning is a huge growth area for probate solicitors like me, as people live longer and government cuts mean more of us have to find the funds to cover our own costs.
The average stay in a residential home is two and a half years, which at today’s rates would mean finding around £75,000 just to pay the bills. For the majority of us this will involve selling property, an upsetting prospect for anyone who has spent a lifetime working hard to leave their children a legacy.
On the upside, not as many elderly people as you may think end up in homes – it currently stands at about 10%. But if you don’t want to hand over your fate to others, it is an issue that must be addressed in good time, particularly if you aim to protect assets to pass down to future generations.
In my experience, there are two schools of thought among clients undertaking care home planning. Some decide to use their money to secure the best quality of life, whilst others feel strongly about family inheritance and are prepared to take their chances in the state system.
I have visited a range of residential homes and seen vast differences in standards and the resources available to staff. In the Bakewell area, we have a choice of excellent accommodation, but it commands fees in the region of £3-4,000 a month. That said, those at the lower end of the price scale are not always nice places to end your days.
Given the rising cost of care, I urge clients to have three things in place – wealth management, lasting powers of attorney and asset protection. We look after the latter two at Taylor&Emmet and have longstanding relationships with financial advisers and accountants, with whom we work closely to ensure your needs and objectives are met.
Some people think that by giving money away they can avoid care home fees, but this is not a viable tactic. Local authorities can look back into your affairs for as many years as they see fit and will refuse help if they think you have tried to dodge the bills.
One client I knew did just this (without seeking my advice first) and her children spent their windfall quickly. By the time she needed residential care, she had no financial support from anywhere, as she was deemed to have divested herself of her assets intentionally to avoid payment of care home fees.
We understand that everyone’s circumstances and outlook on life – and death – is different and we respect your individual choices. However, if you still want to have choices when it’s time to consider residential care, you need to look at trusts and will trusts while you’re fit and well.