Minimising private care home costs

greystones

Hi

We are both approaching 50, have £280k net worth, roughly split 50/50 assets/savings, in reasonable health and DS 14. Savings are currently increasing at around £12k pa.

It is our wish to pass on 99% of what is left to DS and have made wills accordingly. However, the possibility of future care may intervene and substantially reduce what we want DS to inherit.

We are therefore looking for advice/ideas/tips on how to get/keep below the £23k threshold yet still retain an element of control over the above. Obviously this is to avoid care home costs in the future. We appreciate that council homes restrict choice, quality etc and accept our lot should we end up there.

Assuming we're talking several years in the future before this may happen, presumably it's OK to gift DS a substantial amount? If we tranferred a substantial amount to his account (which we have access to), is that counted towards our means when determining eligibility for care costs? Similarly with the house, if we changed ownership several years ahead, would it still be counted?

If you don't agree with this notion that's fine, just after ideas, perhaps from others who have managed to do the above or minimise their liability.

Mojisola

I think you'll find that most of the options have problems attached to them.

PasturesNew

The best thing you can do is move into appropriate "older people" housing in 5-10 years ..... and blow the lot on enjoying yourselves, safe in the knowledge you won't have to move again in the future. Being in the right type of housing means the surviving spouse is more likely to be able to fend for themselves when the time comes, minimising stress and the potential need for any care home.

Also - make sure that both of you know how to run the house in its entirety .... if the one who does everything/knows everything goes first, the one left behind's in a right pickle.... which could lead to stress related problems, resulting in ..... the need for a care home as they can't cope

xylophone

if you give money to your child outside tax privileged accounts see
http://www.hmrc.gov.uk/tdsi/children.htm
http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/PlanningYourPersonalFinances/DG_10013916
Is he eligible for a JISA http://www.direct.gov.uk/en/MoneyTaxAndBenefits/ManagingMoney/SavingsAndInvestments/ISAsandJuniorISAs/DG_199672

http://www.moneysavingexpert.com/savings/junior-isa

Do you own your home as tenants in common?
http://www.primewills.co.uk/will_writers_cambridge.htm

greystones

xylophone wrote: »

if you give money to your child outside tax privileged accounts see
Is he eligible for a JISA

So, if I've read this right, we could gift unlimited capital which wouldn't then count towards being over the £23k threshold? The amount of tax DS would pay on the interest would be no more than what we pay anyway?

Yes, eligible for JISA.

xylophone wrote: »

Do you own your home as tenants in common?

No, I think joint tenants. Again, if I've read right, the property wouldn't count towards being over the £23k threshold if only one has to go into care? If we changed to 50/50 tenants in common, only 50% - £23k could be taken for care fees? And then only charged against the property?

greystones

PasturesNew wrote: »

The best thing you can do is move into appropriate "older people" housing in 5-10 years ..... and blow the lot on enjoying yourselves, safe in the knowledge you won't have to move again in the future. Being in the right type of housing means the surviving spouse is more likely to be able to fend for themselves when the time comes, minimising stress and the potential need for any care home.

Also - make sure that both of you know how to run the house in its entirety .... if the one who does everything/knows everything goes first, the one left behind's in a right pickle.... which could lead to stress related problems, resulting in ..... the need for a care home as they can't cope

If the time comes where one of us has a poor quality of life to the extent we need to be in a care home we both agree that we don't want to burden the other with care costs.

If it were as simple as anything left over is inherited there'd be no problem, what we didn't spend would be inherited. What we don't want is anything left over to be used for our care. We may well blow a fair bit leading up to and during retirement but it's finding the balance as to when to do that.

skintandscared_2

So who should pay for your care then?

BigAunty

Post on the housing forum.

See the info about care home fees and deprivation of capital on the Age UK website. They have lots of info on this topic.

xylophone

With regard to the ownership of your home see "Property Protection Will" in the link I gave you.

With regard to gifting money to your child, you must remember that anything you give him becomes his absolutely, you have no further claim on it and that money given outside tax free schemes will be treated for tax as described in the links.

Remember too that he gains absolute control at 18 (or 16 in Scotland) - the only way to avoid this is to use a discretionary trust - this has complex tax treatment.

If you or your spouse were also beneficiaries you would have a "settlor interested trust" and this brings its own tax/benefit considerations.

Ypu could probably both do with advice from a professional expert in Wills and Trusts if you are thinking of anything more complex than a bare trust for your child.

With regard to such gifts, at the moment you are both (I take it) hale and hearty and relatively young so that gifting money to your child, certainly within the limits of the JISA, should pose no problem from the deprivation of capital angle - however, remember that the authorities do have the power to look back as far as they wish if they suspect deliberate deprivation of capital.

You would find the following worth reading.
http://www.sthelenscarers.org.uk/Pathway/10.CPlanning%20for%20the%20future/Transfer%20of%20assets.pdf

You could consider starting a pension for your child. http://www.myeggnest.com/Info/Childrens-Pension.aspx

margaretclare

PasturesNew wrote: »

The best thing you can do is move into appropriate "older people" housing in 5-10 years ..... and blow the lot on enjoying yourselves, safe in the knowledge you won't have to move again in the future. Being in the right type of housing means the surviving spouse is more likely to be able to fend for themselves when the time comes, minimising stress and the potential need for any care home.

Also - make sure that both of you know how to run the house in its entirety .... if the one who does everything/knows everything goes first, the one left behind's in a right pickle.... which could lead to stress related problems, resulting in ..... the need for a care home as they can't cope

This is really excellent advice, especially the idea of moving into more 'manageable' housing. My first husband and I moved into a 2-bedroom bungalow and on the whole it was the best thing we ever did, even though he didn't live very long to enjoy it. I was left with a mortgage which eventually got paid off by equity release, so - make sure you get the mortgage paid off before any disasters happen.

Approaching 50 - you've got a whole lotta living to do yet, far too soon to be looking forward to moving into a care home.

Saving nearly £12K a year? I should be so lucky! I've saved more in retirement years than I ever did before that, but my savings haven't yet reached those kind of levels.

Now, some of the clever people who inhabit these boards can maybe explain some of these 'cut-off' figures for me, and what they portend. We are not on any means-tested benefits and we like it that way.

The 'cut-off points' I've heard mentioned are: £10K - for means-tested benefits (this was discussed at great length recently)

£23K - is that for paying for long-term residential care? I haven't got £23K yet, but depending how the FTSE does etc, given time who knows.

I've also heard the figure £6K mentioned. DH and I are way, way beyond that.

Have I got all this right?

Another point: you say 'neither of us wants to burden the other with costs of long-term care' - but it is charged to the individual receiving the care, isn't it, so no question of 'burdening' your spouse?

xylophone

£23K - is that for paying for long-term residential care? I haven't got £23K yet, but depending how the FTSE does etc, given time who knows.

See http://www.bbc.co.uk/news/business-14051916