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Equity Release
Fast Facts
Find out all you need to know about Equity Release, the advantages and disadvantages, and how you can benefit from it.
Equity Release Guide |
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CARE FEES PLANNING
Care Fee Costs
The cost of long term residential care fees can amount to a weekly outlay of £400 - £1000+ depending on the level of care, quality of accommodation and location etc.
In England (other parts of the UK are similar) you are expected to pay for your own care fees if your income is sufficient and/or your assessable assets exceed £23,000 (Scotland £22,000 & Wales £21,000). This includes your home and savings. Also your pensions and certain state benefits will be taken into account to pay for weekly care fees, although you receive a minimum weekly sum of £21.90 as a personal expense allowance.
If your total combined savings fall below the threshold of £23,000 the local authority may contribute. However if your total worth is between £14,000 and £23,000 you will have to contribute a weekly ‘tariff’ of £1.00 for every £250 of savings over the lower threshold of £14,000.
So 52 weeks @ £1 = £52. Fifty two pounds as a percentage of £250 = 20.8% p.a. Therefore under present rules, your capital between £23,000 and £14,000 could disappear in approximately 5 years.
Example
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| Per Week |
| Long Term care fees | £500 |
Total assessable income
| £200
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| Deficit | £300 | |
How the care fees deficit is paid:
- Total capital under £14,000 - Local authority contributes.
- Capital over £14,000 but under £23,000 - Tariff income is levied at the rate of £1.00 per week for every £250 of savings to pay towards cost. The local authority makes up the balance.
- Capital assets over £23,000 - All money is used to pay the £300 weekly deficit. So total capital (including house sale proceeds) above £23,000 will reduce by more than £15,000 for every year in long term care accommodation. Once below £23,000, Rule number 2 applies.
 The Problem
Unless you can prove to the local authority (or a court) that you had a valid reason for gifting your home and/or savings, such as inheritance tax planning, the transaction is likely to be judged ‘a depravation of assets!’. In this instance even though the assets may have been passed to beneficiaries’ years before going into care, the local authority may claim these assets as ‘Notional Capital’. Certainly within 6 months of going into care, a sizeable gift could still be legally claimed by the local authority as a depravation of assets.
INHERITANCE TAX – V – CARE FEES!
Inheritance Tax applies to assets exceeding £325,000 and then a 40% tax applies. Also there are lots of legal ways to greatly reduce this liability. Conversely an estate valued at less than £325,000 can be quickly swallowed up by long term care fees that may cost well in excess of £25,000 each year and rising?
The Solution
The best solution is to seek independent advice from a qualified care fees specialist. A network of professional independent financial advisers specialise exclusively in the area of long term care planning. They are all fully qualified independent financial advisers as required by financial services legislation, but hold additional qualifications by examination in long term care.
There is absolutely no charge or obligation whatsoever and your advisers, friends or family are welcome to attend initial and subsequent consultations in the comfort of your own home if desired.
A professional care fees report tailored to your individual circumstances will then be sent to you free of charge. You do not have to follow recommendations made by the adviser, but if you do the advisers fees will normally be compensated by commissions received as a result of investment solutions recommended.
Where appropriate, your report will contain specific care fee recommendations that will take into account, state benefits, inheritance tax, trusts and investments.
Remember long term residential care fees need early planning for when the time arises. Our advice is that you download your Free Care Fees Guide post-haste!
Express Funding Solutions
30 Montgomery Way
Manchester M26 3TG
E-mail: smd@ef-solutions.co.uk
*NOTE
Care fee specialists are only too pleased to establish professional relationships with financial advisers and care providers.
© Copyright 2006 EF-Solutions.co.uk. All Rights Reserved
"We are neither care fees specialists or independent financial advisers and as such, are unable to offer financial advice. Enquiries generated via this website are passed on to regulated independent financial advisers that are also qualified care fees specialists by examination through a recognised body such as the Chartered Insurance Institute."
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