Protecting a house against long-term care money grab

EdInvestor

monkeyspanner wrote: »

Ed you are absolutely right but the care anuity options are not generally known because the 'care managers' employed by the social services do not explore and explain funding alternatives with clients considering residential care...It is left to charities to pick up the information gap.

And they don't do it very well, quite clearly.

Time for someone like the FSA to produce a proper leaflet which can be given to relatives in this situation, outlining products like

-Care annuities
-Equity release
-Renting out the person's home
-Ways of investing capital to generate income to pay fees
-Govt allowances that can be claimed (may be 150 pounds + a week)
etc. etc

Most people seem to think that they have no choice but to sell the oldie's home and then spend the money on the care fees until it's down to 21k when the council takes over.

Of course this is not so.

Errata

monkeyspanner wrote: »

So are you saying that this is a justifyable 'wealth tax by stealth' to allow the state to profit from market forces? Or is it simply a 'windfall tax' on individuals because the state does not have the guts to tackle the likes of the utility companies or the high earners in the city whose 'hard work' in the last few years has caused so much damage to our banking system and pensions or the non-domiciles who pay less tax than the ordinary working man.

Or is it simply that sick, vulnerable, elderly people are a lesser priority in our society than the useless able-bodied layabouts who are never likely to contribute taxes or to accumulate wealth to pay for their own care and whose only pupose in life is to draw benefits and to create a new generation to follow in their footsteps and hopefully not terrorise too many elderly people in their unlimited leisure time.

I'm saying that some people have been lucky enough to buy property which through no actions of their own may now have a much higher value than their outlay.
There are a great many older people who were unskilled workers, never earned enough to be able to obtain a mortgage and consequently don't have assets which could be turned into cash to pay for their residential care. They are funded by the state, which is right and proper.
Layabouts and the workshy are another discussion.

dunstonh

So it's OK for you to drop dead and pass £300,000 tax free to your beneficiaries from your accumulated wealth but if you are ill for a few years prior to death you can only pass £21500 tax free and the rest is up for grabs by the state either in the form of care home fees or to go towards a care anuity to pay care home fees as edinvestor suggests.

Yes. Because I have choice. I can insure myself or take steps to protect my assets.

If money can be found to fight questionable wars around the middle east I am sure its not beyond the imagination of our treasury to find funds for caring for our elderly.

I suggest you compare the budget of the NHS to that of the Gulf wars and you will realise that that despite the money drain that the wars are, they are nothing compared to the budget needed for provision of old age car which could sky rocket due the baby boom generation now getting close.

cupid_s

I personally think that the individuals themselves should choose what their money goes on. If they desperately want their family to have the money, then they should have been making plans long ago to ensure they weren't in the position that everything they have goes on paying for their care.

Many elderly people now do have a lot of assets often due to house price increases, but most with very expensive houses could downsize and give a lot of their money away. If they have not done this I can only assume they are happy for their assets to be used to provide them with a high level of care when they need it.

I understand the vast burden placed on the NHS by people requiring full time care and they need the money to pay for this from somewhere. Do you realise that if everyone with Alzheimer's disease, for example, needed a care home place and this was paid for by the government - it would cost 20 billion pounds a year! And the number of people with alzheimer's disease is set to quadruple in the next 35 years because everyone is living longer? And that is just one condition that might require long term care.

I would much rather the money comes out of my estate once I no longer have any use for it, than me having to pay significantly higher taxes every year until I reach that point.

And in terms of people 'needing' their inheritance to get on the property ladder: I expect (or at least hope) to be in my 50s or older when my parents die. The money they leave me isn't really going to help me get on the property ladder then is it?

seven-day-weekend

Excellent post Cupid.

dmwg40

LondonDiva wrote: »

Several things

1 - sorry to hear about your mother and I would advise you to consider contacting your local age concern for advice. Is the main part of her care needs social or health?

2 - Her home will not be 'nabbed' here and now to pay for anything. What tends to happen is that a charge is placed on the property so the council can be paid on a death.

3 - And this is REALLY important.

It's not a grab, it's using her money to provide her with as good a care as she can afford. Having that level of financial resource means she / you will be lucky enough to be able to pick and choose what the family consider an acceptable level of care / support.

Having worked and saved, your mother may feel that the money is better spent on her needs / according to her immediate priorities to ensure she gets the best of everything not just the basics that the council / NHS is willing to give her, rather than paying for a house deposit for a grandchild etc, etc.

Very well said

EdInvestor

margaretclare wrote: »

Does the government REALLY 'grab' a house in the way implied? How? And what does 'the government' do with it once it's 'grabbed'? Or is this just attention-getting for a controversial topic?

To give an example: Let's say either you or your DH required full time care.As far as I understand the procedures what would happen is as follows:

1.First you would find a home and work out how much it would cost.Then deduct your pensions and other income (minus expenses allowance) plus allowances like AA and medical care allowance .The remainder would be the extra that needed to be raised.It's typically around 12k a year.

2.Let's say the value of your half of the house is 95k(ignoring the equity release aspect for now).If this was realised, you would be probably able to afford to pay the extra 12k costs of your care via a care annuity costing around 60k (depends on age and health), with a chunk left over to invest and provide some extra income.This would give you peace of mind via the income guarantee and not being at the mercy of the council.You could also move around to other homes as you saw fit.

BUT how would this affect DH? If he could downsize to another home using his half of the property value well and good, but if he couldn't, then the council would get involved.

Rather than using the care annuity, they would pay the 12k a year in cash (effectively lending you the money)and take a "charge" against the property.This charge is placed on the deeds at the Land Registry and means the house can't be sold until the council loan is repaid. DH could stay there until he died (or also went into care) at which point the home would be sold to pay off the "loan" for the costs of the care. This route is likely to gobble up the property value more quickly , though there is a 'no negative equity' guarantee and thus anyone who lives a long time will end up wholly council funded and with no house.A person who dies soon after going into the home may have racked up only a small "loan" and thus most of the value of the property may still be available to the partner/family.

Obviously there are potential winners and losers in all this, which is why the care annuity is the preferred route IMHO, the one that gives the most certainty, least worry and fairest sharing of the burden among all sides.

A particularly bad aspect of the current system is the way it sets up a conflict of interest between the oldie and his or her children, under which the sooner the oldie dies, the better off the children will be - and vice versa.To my mind this is at the root of the attitudes seen here that we dislike and the sooner the system is changed, the better.

meester

dunstonh wrote: »

Ok, lets open that up a bit more...

If the individual needing care doesnt pay for it, who is going to?

Can we stop with the moralising? It is beside the point. It is relevant to explain to the OP that paying for care privately will give more freedom and potentially better care. It is also relevant to explain the technical reasons about whether or not the OP will have to pay for the care using the asset (the house), and whether there are any steps that can be taken to prevent this, or to get help from the government.

But all the posts saying that it is immoral that people's houses are worth lots of money, and that the government should or shouldn't pay for this are irrelevant, and how people shouldn't be thinking of inheritances. The site's owner has made it very clear that the purpose of this site is to get people whatever they can legally get to save them money, be it cheaper car insurance, cheap holidays, or money from the government.

There is not any place on this forum for discussions of the property ladder. They might be interesting but they are not helpful for the OP.

Either the OP has to sell the asset or he doesn't.

Errata

Ed, we live in changing times, the system may change but there's no guarantee it will be for the better.

There are many older people living in care homes who could easily live with a daughter or son and their families as they don't need any more nursing care than that provided by a daily visit from a nurse, and help in washing and dressing, meal preparation and mediation taking from the family they live with. This is what used to happen in the days when there were no extra benefits available such as attendance allowance, carers allowance etc.

EdInvestor

Errata wrote: »

Ed, we live in changing times, the system may change but there's no guarantee it will be for the better.

There are many older people living in care homes who could easily live with a daughter or son and their families ... This is what used to happen in the days when there were no extra benefits available such as attendance allowance, carers allowance etc.

You must mean those distant days when men were the breadwinners and women didn't work, but rather stayed at home as unpaid carers of children and elderly relatives.Times have indeed changed: it's a rare family that can manage on one income these days.


BTW I see no reason why people on this forum should not engage in policy debate on the issue of old age care and how it should be financed.Policy in this area is not set in stone - indeed it's currently under review by the Government.Forums like these can be very useful in helping to collate up to date public opinion on the subject so that an acceptable consensus can be formed which takes into account a wide variety of vested interests than currently is the case.