Long-term care isn’t something many of us think about when we’re first making our will or drawing up our estate plans. However, by retirement age, you need to consider and put into place provision for your long-term care should you require it.
The rising cost of long-term care
Care home fees have risen dramatically in the last three years. Back in March 2021, Which? calculated the average cost of a residential nursing home place to be £937 a week, or a whopping £48,724 a year. Some care homes have further increased their prices since to cover rising energy, wages and food costs.
The government does offer support for the cost of long-term care, but you will be means tested to see if you are eligible. At the time of writing:
- If you have savings/assets of more than £23,250, (known as the upper capital limit or UCL), you will need to self-fund all your care.
- If you have savings/assets of less than £23,250 but more than £14,250, you are eligible to receive some financial support from your local authority.
- If you have savings of less than £14,250, (known as the lower capital limit or LCL), you will not have to pay anything for your care.
It’s worth bearing in mind that local authority provided care may not be the same experience as privately provided care. What’s more, as our long-term care page explains,
“Your local authority can take 100% of your assets to pay for your long-term care…. Any income would be assessed and used towards the cost of your care (so) your children and grandchildren could lose their entire inheritance.”
Means testing advice
Navigating your way through the means testing process can be complex and very time-consuming. It may also not actually be in your best financial interests if you have the ability to pay for your own care. At Panthera Estate Planning, we offer advice and help with the local authority means testing process for you, and for your adult children if they are making the application on your behalf.
To cap it all
The good news is that the allowances are changing in October 2023. This is when the much-touted £86,000 cap on the amount anyone in England needs to pay for their personal care comes into force.
BUT, and it’s a big but, that is a cap on the cost of your care. It does NOT include what is known as your daily living costs (DLCs). As the Government website explains:
“Under the capped system, everyone will remain responsible for their daily living costs (DLCs), such as rent, food and utility bills, and this will apply equally to those in a care home as to those in their own home.
“People will remain responsible for their daily living costs throughout their care journey, including after they reach the cap. For simplicity, these costs will be set at a national, notional amount, the equivalent of £200 per week in 2021 to 2022 prices. DLCs are a notional amount to reflect that a proportion of residential care fees are not directly linked to personal care, like rent, food and utility bills and would have had to be paid wherever someone lives.”
Given that the local authority can asset-strip to pay just this portion, it’s worth spending time talking to us to discuss the best strategy for you and your family.
UCL and LCL changes in 2023
In October 2023, the upper capital limit (UCL) will rise substantially from the current £23,250 to a much more realistic £100,000. As the Government website explains:
“As a result, people with less than £100,000 of chargeable assets will never contribute more than 20% of these assets per year. The UCL of £100,000 will apply universally, irrespective of the circumstances or setting in which an individual receives care.”
The lower capital limit (LCL) will also rise to £20,000, but given the rise in interest rates and the value of many homes in our part of southern England, few people may actually be eligible.
Help with estate planning and long-term care provision
In summary, long-term care is going to cost more people more money for a longer period unless they have very little assets and/or savings to start with. At Panthera Estate Planning, we can help with all aspects of long-term care funding planning, plus local authority means testing and ring-fencing assets in your estate planning.