"There are a number of things that can be done to limit the impact of care home fees, but you need to be careful of depriving yourself of an asset to try and avoid the payment the costs"
With residential care home costs rising to an average of £39,000 per year, a leading lawyer has stressed the importance of sorting out your affairs early to try and limit the impact of moving into care on both you and your family
Emma Woollard is a partner in the wills, trusts & estates team at Ipswich-based law firm Prettys, and explained how through getting wills and power of attorney drawn up early facilitating the payment of care home fees won’t feel as daunting.
“If your capital and income is above £23,250 you will be expected to pay for your own care fees and often this leads to people having to sell, assets such as their house in order to afford them,” she said.
“There are a number of things that can be done to limit the impact of care home fees, but you need to be careful of depriving yourself of an asset to try and avoid the payment the costs. It is important to ensure wills and power of attorneys are up-to-date.
Wills are extremely important and although no one likes to think about their end of life, using your will to create a trust for your surviving partner can limit the impact of care fees that they may incur in the future.
“50% of the home’s value will go to the partner, which can then be used on care home fees if needed in the future. While the other 50% remains in trust for eventual distribution to the children. For the wealthier among us there are also specific investments which can limit care home costs as they are not subject to means testing.”
Emma also suggests utilising the NHS’ continuing healthcare scheme which is often overlooked.
“NHS continuing healthcare is a scheme where the NHS pay for the care of seriously ill people if they have a health need regardless of where they receive that care.
“If someone needs to go into a nursing home or they have a health need at home the scheme will cover the fees irrespective of what you’ve got in the bank. So, we would always recommend people to check their eligibility for this. Hospitals should but often won’t flag it but if you do it could save a lot of money.”
As well as crippling care home fees, another problem Prettys regularly come across is people not having an appropriate power of attorney in place. A power of attorney is a legal document that allows people to make decisions on behalf of the ‘donor’ if they become mentally unable to look after their own affairs.
Emma highlighted some of the common problems they come across.
“We always recommend for clients to think carefully about who they appoint as their attorney and the forms allow for replacements to be appointed in case anything happens to them. A problem we often come across is when people have been widowed and their partner who has passed away is their power of attorney. Therefore, even though they think they might be covered as one is in place, they actually aren’t.”
Emma continued: “As well as this we come across a number of elderly people who are losing capacity when they realise, they have nothing in place. This is when it’s riskier as sometimes they no longer have the capacity to enter into a power of attorney and the process becomes more complex.”
In these cases, an application to the Court of Protection to appoint a Deputy will be required. This process can be costly and certainly is more complex and time consuming than entering into a power of attorney. A Deputy can be a friend or family member, the local authority or a solicitor. Prettys’ solicitors act as deputies for a number of clients.
By having a will and a power of attorney in place the impact of care can be minimised both for you and your family. A carefully constructed will, having some prudent financial advice and having a power of attorney document in place may be able to limit the financial impact. As well as this it will enable your attorney to take away some of the burden and worry of the move, the administration and the inevitable financial restructuring in order that care fees can be paid.