Long-term care: your questions answered

Overall a good article. As with most things in life this issue should be thought of well before the situation arises, a bit like booking a ferry crossing before you turn up to a crowded port.

Trusts are indeed a complex area and many are wary of them; however, providing you are always in control as a Trustee together with a memo of wishes until the time when residential care is required then they work well.

Professional advisers like myself welcome the publicity these articles produce as we are always telling people "It's never too early to plan these things - but it can often be too late!"

One thing that was touched upon but not made very clear is that the LA can often end up controlling a resident's finances.

Two questions -

what did we all pay "national insurance2 contributions all those years for? - were we robbed?

How does the existence of reciprocal powers of attorney affect things?

Isn't there another problem in that very often the government introduces retrospective legislation to unpick trusts such that you end up worse off having to pay more legal fees?

What this article does not say is that if you co-own a house with your spouse, and she needs to go into a care home, the local authority will take a charge on the home for up to 50% of the value of the home. As I understand it the will effectively trap the surviving partner in the conjugal house, unless it's worth so much that down0sizing is possible.

No-one has raised the topic of Long Term Care Bonds!

We used a reputable advisor to obtain one - and lost most of the £20,000 we invested.

The Ombudsman didn't want to know!

Why do people who own a house think they should have their care home fees for free? We are only moving home, after all, and we should not expect the taxpayer to fund this final move. We have to pay our bills when we live in our own home, so it is reasonable to continue paying them when we are in a care home. But if one has no income exept the state pension and is not a houseowner, then the tax payer has to, and does, foot the bill. Surely, any caring child would want the best care for the parent/s who have to move to a care home and would not object to the parents' house being sold to meet the bill.

The way to live ....

spend all your money on expensive holidays.. do not save a penny

for your family to inherit.. my late Father was thrifty, when he

and my late Mother went into a nursing home, we were left with

£3.500 between the two of them. Not enough for funeral expenses.

Now people are allowed to keep more capital.. it is not fair, taxes

have been paid, council taxes and rates were paid. My Father was

not allowed to give presents to his Family from his capital.

I agree, from a public policy point of view, that taxpayers should not be expected to pay for other peoples care when the recipients of that care have large resources at their disposal - house or otherwise, that will otherwise just be handed on as an inheritance. I suspect a lot of these assets arise from windfall property gains rather than from careful spending/saving as often alleged.

Nevertheless, there seems some confusion in the rules that perplex me.

1. Is it true, as stated previously, that a local authority ( LA) can put a charge on 50% of a house in shared ownership with a spouse? I understood that the house was disregarded in the financial assessment when a spouse continues to live in the family house after the spouse has gone into care.

2. I also understood that a house in joint ownership was also disregarded on the basis that it effectively had no market value if the co-owner refused to sell his/her share. Can a LA place a charge on the relevant share of the house in these circumstances? If not, then why don't people routinely sell off a small percentage of their home to their offspring?

Have a look at this link:

http://www.direct.gov.uk/en/CaringForSomeone/CareHomes/DG_10031523

This is from Age Concern's fact sheet 39 Paying for care in a care home if you have a partner

8. When a partner wants to move from a jointly owned house

When one of a couple enters a care home on a permanent basis the local authority has to disregard the resident’s interest in their former home for as long as the other spouse or partner remains there. However, the partner or spouse may at some point wish to move from that property, perhaps to somewhere smaller and more manageable. Once the original property has been sold, the disregard ends and the resident’s share of the proceeds could be taken into account in the financial assessment.

'Could' in the last sentence admittedly!

In answer to J Bean's question 2 above that would be deprivation of assets and not allowed unless done many years before death (and even then looks a bit artificial), see Age Concern on the voluminous guidance on this issue.

J Bean. The answer to your questions:

1. Yes the LA can place a charge on the property - some do and some don't and that is regardless as to whether a dependant relative is living there, it just means that they cannot force the sale whilst the property is occupied by a qualifying person. If the property is owned as Joint Tenants the charge can be for 100% if the other joint tenant predeceases the person in Care.

2. Selling part of the house is fraught with problems. A commercially viable rent has to be charged, tax paid on income, CGT liability, divorce or bankruptcy proceedings forcing the premature sale etc. etc.

A simple rule to follow is; NEVER give away anything you cannot afford to lose.

A properly set up IIP Trust is the safest and most effective solution.

Oh, and by the way, why should someone who has already been a taxpayer AND managed to save/inherit or whatever pay a second time for Care that they would have loved to have not needed in the first place?

Looked up IIP on the net and found the following,under PWT Advice.

IIP An Interest in Possession Trust

Since FA 2006, it is only possible to create an IIP Trust during lifetime for certain specific beneficiaries (e.g. Disabled)

Can you simply not sell your house to your offspring/s, with yourself/ves as life tenants, arrange for the mortgage to be at a level that does not affect the care situation, which you can have when required, but which you can dispense with when not required, passing it on to them within the allowed £3500 tax limit/annum.

Pass on what remains of the unpaid for property through the will or trust or similar on death.

We've always kept all our assets in separate names rather than owning things jointly (apart from the flat, which is owned as joint tenents rather than tenants in common); my spouse is fifteen years older than me. My understanding is that the LA could take all his assets down to his last 14,000 pounds; Would they then come after my savings or would they allow me to keep my assets, especially with the married woman's property act?

He's always paid all the bills; I'd assume the bills would be transfered to my name which is fair enough but would they also take ALL his pension income or perhaps just half? It's all very confusing. They should have a consistent way of dealing with all this.

He was fortunate to be given medical redundancy with a third salary pension plus lump sum of over one year's salary. Would I be left to completely fend for myself or would the LA allow me to keep perhaps 50% of his pension income to use towards my household bills?

If they could take virtually everything away it makes me wonder if it's even worth trying to save any more money. I've been trying to save my annual ISA allowance to build up an income for when I'm older, especially as I won't have an occupational pension like he got from his local government. But perhaps it's pointless if it could all be clawed back further down the road.

My siblings and I arrange a rota of carers and sleepovers to care for my parents in their own home. This was their wish, and their pensions and savings cover it with some help from the state. It takes some organising, but its the best for them, especially as they are less anxious in their own surroundings. And everybody visits............whenever!

M Kail

That is OK, if you all live locally, not always the case.

Laura Sommers

If you decide to spend, spend, spend, Mr Bean of the BoE will be more than pleased.

Lorna Burke's suggested figures of £36,000 for Care Home Costs are well below my recent experience in South Wales where friends are each paying £900 per week i.e. £45,000 EACH per annum to stay in their Care Home.

I know that there is a difference in the Local Authority policy for charging between residential homes and nursing homes and the level of care is obviously different but I have no information about that.

The total uncertainty adds to the concern. My in-laws are both almost 90, live in their own flat which is almost their only asset. Currently they enjoy their simple life well funded with pension credit and Council tax paid for them, but grandad has signs of dementia, his wife has limited abilities to cope with the inevitable strains, and the future is very uncertain, made much worse by the ongoing financial help scenario is oh so vague, seemingly dependent on how a particular local authority staffer happens to interpret the law on a specific occasion.

They have been lucky to live such long and generally health lives, but state care in their dotage should be much more helpful.

considering staying put and renting my home

I suppose I'm in that grey area where I'm damned if I do and damned if I don't. It seems to me that it makes sense to save as hard as I can up till he's drawing his pension in five years then start to ease off my hours so I can make the most of his remaining years...if the worst case scenario happens further along, at least I will know I've given things a shot.

From what I understand, they wouldn't leave me completely penniless but don't think I should rely on him leaving me an inheritance. He retired at 50 due to a medical redundancy whereas I'm assuming I'll have to keep working till I'm more like 68 to 70 due to state pensions rising. Let's just hope neither of us has to go into a home! But as we never had any children I suppose it's not the end of the world if I end up dying completely broke.

In answer to the question why should we expect the government to pay for care, the answer is quite simple. I have paid all my life into the National Insurance fund, one of the promises of which was that it would look after me in my old age. Dementia etc are illnesses. The government has taken my money and spent it on other things and now keeps saying that it can't afford to pay for me when I get old. If the Government were an Insurance Company it would be ordered to compensate me as it has effectively taken my money on false pretences. In addition that nice Mr Brown stole a large chunk of my company pension. The government can hardly claim to be surprised at how many pensioners there are, we have been around for more than 60 years!

The other problem is that Government policy is now to keep us alive as long as possible, even when we want to die and are in a very sad state. They feed us drugs that keep us just about alive but don't make us better and refuse us treatment that would because they have surrendered control of medication to the pharmaceutical companies. Frankly, if you are going to force me to live longer than my alloted span, you can jolly well pay for it.

Perhaps a more cost effective government policy than prescribing statins etc, would be to prescribe all people over 60 a free McDonalds happy meal once a day, give them a voucher for 40 cigarettes a day free and send round a gratis crate of spirits once a month, delivered by attractive young ladies or gentlemen wearing not a lot. Then we would have happy OAPs who would would die much sooner with a smile on their face.

I am fed up with the elderly being demonised for needing care. Its just spin.

David Lewis makes a good point about the life-enhancing effects of drinking, smoking and seeing scantily-clad young temptresses on a regular basis.

“No pleasure is worth giving up for the sake of two more years in a geriatric home at Weston-super-Mare"

Kingsley Amis

When my uncle left the army after the war he went to work for the GPO.

He worked hard until he retired. He had remained a batchelor and enjoyed travelling.

He was of the old school. He saved because he didn't want to be a burden when he got old.

He was diagnoised with senile dementia and went into a care home costing £2,000 a month.

To pay for this they took his GPO pension and his state pension which together covered £1000.

He had also save around £120k in building society accounts from which the additional £1000 pm was taken.

When I asked the Care Home manager " would my uncle have still got this care if he had no pension or savings?" she replied "off course"

And that my friends is the problem. If you save you pay twice, once through your taxes and NI contributions and again from your savings, home, pension etc.

If you don't save, live in a council house etc you pay only once and maybe not at all if you are a professional benefit claimer and can't be bothered to work.

My uncle need not have saved a penny, he should have opted out of his pension, He should have enjoyed more travelling, enjoyed his life. Instead of thinking "I don't want to be a burden" he should have been saying to himself " Sod everyone else, Sod all those mug taxpayers,I couldn't care less when I'm old the state will pick up the bill"

The best financial advice is spend it, enjoy it and let some other mug's taxes cover the cost of your dotage.

This is exactly why the challenge for our politicians is now to devise a new system for providing long-term care that does not encourage people to spend all their money before they get there.

I think there is a two-tier system now, with private nursing homes providing a better standard than the basic model, just as you get in hospitals and schools. So any new system should not widen the differences between the two tiers of care.

But it does seem grossly unfair for people who have saved all their lives to have their savings cleared out by their care home while the person in the next room pays nothing.

I can't help thinking that the super-rich find ways round the need to pay (or have so much money they don't need to), the super-poor are catered for but the law-abiding (honourable?) masses in the middle are left paying huge bills. Didn't the Queen Mum leave a debt of £6 million while passing on her assets to her nearest and dearest?

alot of people are not mentioning the fact that ni contributions have nothing to do with it as most homes a private sector this is why people have to sell homes if you live in a council house then you dont unless you own it coucil would not sell there assets also savings are taken into account so no home no savings still same care as person with home and savings this is the argument

I wouldn't be surprised if euthanasia becomes widespread as a means of freeing up much-needed hospital beds and to save the NHS/government money. Perhaps people would be able to opt out for religious reasons through a living will but otherwise could be euthanized even without overt consent as a practical way out. WOuldn't surprise me at all in our secular materialistic society...

Can I rent out my family home to pay for my residential care and are there any tax implications or should I leave it to my two daugters to do it on my behalf ?

Has anon 3 looked into being cared for in her own home? or sharing the house? In London in the 70's lots of old friends did that.