Brown pledge on care costs

EdInvestor

benood wrote: »

Absolutely but I think the people who are really hit are those who have enough money saved to be paying to be cared for in the same home as their improvident contemporaries who are being funded by the council.

Indeed so. There is a serious problem affecting the group of people in the UK who are better off than those on benefits, but not what you would call well-off .

These are the people who've made the effort to save and pay off a mortgage and thus own a modest home, who have worked and paid NI contributions through their lives and have a decent state pension, and/or a modest company pension plus a state pension.

There is not much difference between these people and those who have not bothered to invest or save at all - the latter will get free housing and council tax along with quite a decent state pension(credit).No effort required and a similar standard of living.But at least the first couple can hand down an inheritance to their children - the family home.They can all feel they have been upwardly mobile and rewarded for their hard work.

But what if they need care?It's OK while both members of the couple are alive - the council will top up the pension of the person in care and the spouse in the family home will not be disturbed..But when they die and their widow/er later needs care, look what happens:

The council will not top up the pension to meet the fees, but will rather require the sale of the house to provide funds to top up the pension contribution.Meanwhile the person in the next room on benefits is topped up for free.It's seen quite rightly as outrageously unfair.

One obvious simple move would be for councils, rather than requiring the sale of the property, to allow it to be rented out, as long as the rental income was contributed to the cost of the care.

nicko33

Dithering_Dad wrote: »

As a final point on this subject, I'd like to suggest the following example. If my Dad has a house in london worth £600k, cash savings amounting to 20k and an investment portfolio of £100k, is it fair for a single mum struggling along on the breadline to be supplementing my Dad's stay in a care home via her (ever increasing) Council Tax payments just so I can get a huge payoff?

At some point the Govt is likely to get their hands on 40% of a large chunk of all Dad's money in inheritance tax. Dad is paying for himself and subsidising several others, and paying for single mum's child benefit.

Dithering_Dad

!!!!!!_here wrote: »

But you might be a single mum too, or on disability benefits...

This taken from Help the Aged website. I have highlighted the two examples you gave, both would make the house exempt from being counted as "capital" towards the are home:

Your property
If you own your own home, its value will usually be counted as capital. However, there are some important exceptions to this rule:

• Your property should be disregarded for the first 12 weeks after you enter into care permanently.
• If your husband, wife or civil partner (or unmarried partner) lives in your home, then its value will not be counted as capital in the assessment.
• If a relative aged 60 or over lives in your home, then its value will be ignored.
• If a relative under the age of 60 who is incapacitated lives there, then again the value will not be counted. (In general, someone could be judged to be incapacitated if they are receiving a sickness or disability benefit such as Incapacity Benefit or Disability Living Allowance.)
• If your home is occupied by your estranged or divorced partner and he or she is a lone parent with a dependent child, its value will be ignored.
• The value of your property should be ignored if you are liable to maintain a child under 16 and your house is the child’s main home. The child must be either a relative of yours or a relative of a member of your family.
• The local council is also allowed to ignore the value of your property if it is the permanent home of someone who does not fall under these categories – for example, your carer. The local council is not obliged to do this, but can choose to use its discretion.
• If you are a temporary resident in a care home the local council should ignore the value of your home. You can be classed as temporary for up to 52 weeks, possibly longer at the discretion of the local council. See Temporary Residents for more information.

!!!!!!_here wrote: »

But what if he lived oop North in a place worth £75 or so ?

Then it wouldn't be factored into the equation, you have to have at least the following in assets before you start paying towards your own care:

England and Northern Ireland: Assets over £22,250
Wales: Assets over £22,000
Scotland: Assets over £21,500

taken from here: http://www.helptheaged.org.uk/en-gb/AdviceSupport/FinancialAdvice/CareHomeFunding/as_funding_190106_3.htm

Dithering_Dad

nicko33 wrote: »

At some point the Govt is likely to get their hands on 40% of a large chunk of all Dad's money in inheritance tax. Dad is paying for himself and subsidising several others, and paying for single mum's child benefit.

Why are these people needing to be subsidised by an old man? Why does the single mum not get government assistance?

Why isn't Dad enjoying his own hard-earned money while he's still healthy enough to enjoy it? Why should he scrimp by to support other people who are well able to support themselves?

Dithering_Dad

EdInvestor wrote: »

Indeed so. There is a serious problem affecting the group of people in the UK who are better off than those on benefits, but not what you would call well-off .

These are the people who've made the effort to save and pay off a mortgage and thus own a modest home, who have worked and paid NI contributions through their lives and have a decent state pension, and/or a modest company pension plus a state pension.

There is not much difference between these people and those who have not bothered to invest or save at all - the latter will get free housing and council tax along with quite a decent state pension(credit).No effort required and a similar standard of living.But at least the first couple can hand down an inheritance to their children - the family home.They can all feel they have been upwardly mobile and rewarded for their hard work.

But what if they need care?It's OK while both members of the couple are alive - the council will top up the pension of the person in care and the spouse in the family home will not be disturbed..But when they die and their widow/er later needs care, look what happens:

The council will not top up the pension to meet the fees, but will rather require the sale of the house to provide funds to top up the pension contribution.Meanwhile the person in the next room on benefits is topped up for free.It's seen quite rightly as outrageously unfair.

One obvious simple move would be for councils, rather than requiring the sale of the property, to allow it to be rented out, as long as the rental income was contributed to the cost of the care.

Emotive stuff Ed, but not really based in fact (are you a politician?).

Taken from the same Help the Aged website:

Deferred payments
The local council cannot force you to sell your home, but if you are unable to cover your care home fees the money you owe your local council will mount up. However, the local council can allow you to defer part of your contribution if you are unable or unwilling to sell your home and you don't have enough income or other assets to cover your full fees. The local council will effectively be giving you an interest-free loan. This will be paid back when your property is eventually sold, or when your estate is wound up.

Basically, this means that you could rent out your elderly parent's house and as long as it cover the costs, then when they die you get your hands on the house.

There is also nothing to stop our parents from doing an equity release (obviously not through some of the 'sell to let' scumbags) when they first retire so that they can then enjoy their 'golden years' with Saga holidays and such.

Having a more enjoyable retirement will "reward [them] for their hard work" far more than leaving their hard earned to the kids to waste.

EdInvestor

Dithering_Dad wrote: »

Basically, this means that you could rent out your elderly parent's house and as long as it cover the costs, then when they die you get your hands on the house.

For the people I'm talking about, this won't provide anything like enough to meet the shortfall on the fees, because their pensions are quite low.

It would work for someone with a decent sized pension (say 17k+).But such a person will probably also have a spare 75-100k or so in savings/investments stashed away and thus will be able to purchase a care annuity to meet the shortfall.So the house won't even be touched - it's safe for the family/kids.

There's no doubt the current system impacts on the independent but less well off group very severely.Effectively it wipes them out.They lose all the benefits of their savings and are reduced to the same level as people on benefits.

Many of these people will also be affected by the withdrawal of the 10p band and they will be more heavily impacted by the rises in basics like food and utilities.

The Government urgently needs to get a grip on how it's policies are impacting this group as many will be Labour voters.

benood

Dithering_Dad wrote: »

Basically, this means that you could rent out your elderly parent's house and as long as it cover the costs, then when they die you get your hands on the house.

Having a more enjoyable retirement will "reward [them] for their hard work" far more than leaving their hard earned to the kids to waste.

Although in principle you can let an OAP's house I'm sure it happens very little in reality.

• typically OAP's go into a home initially as respite but don't leave - however, they want to keep the option to move home as a possibility
• how many old people's houses can be let without significant up front expenditure?
• Care home fees are well in excess of typical rents

Many will have inheirited from their own parents and don't consider their assets as fully their own so don't want to "waste" them any more than their kids are likely to.

You seem very cynical of children's motivations DD - is there a reason for this?

Dithering_Dad

benood wrote: »

Although in principle you can let an OAP's house I'm sure it happens very little in reality.

• typically OAP's go into a home initially as respite but don't leave - however, they want to keep the option to move home as a possibility
• how many old people's houses can be let without significant up front expenditure?
• Care home fees are well in excess of typical rents

Many will have inheirited from their own parents and don't consider their assets as fully their own so don't want to "waste" them any more than their kids are likely to.

You seem very cynical of children's motivations DD - is there a reason for this?

No reason - I just think that it's unfair for everyone in society to pay for someone's parent to stay in on old folks home, when they can well afford to do so, just to safeguard their children's inheritance. Are we so entrenched in the welfare system that we can't see that people should pay for services if they can afford to do so, and that "you get what you pay for"?

I don't understand why I'm the lone voice here to be honest. Perhaps it's because I'm really happy for my parents to spend all of my 'inheritance' (aka their hard-earned) on themselves rather than scrimping it away until they're so infirm they can't spend it and then eeking out the remainder of their lives stressed about how their son's inheritance money is being stolen.

It makes me smile when you all go on about how outrageous it is that people should pay for their care homes, yet the same people on other threads are outraged about the level of council tax that we all have to pay and outraged that bailiffs are knocking on doors collecting CT arrears. I wonder sometimes is MSE is populated by professional outrage-ers.

Please answer me this - why should my council tax keep going up in order to pay for you to get an inheritance?

Dithering_Dad

EdInvestor wrote: »

For the people I'm talking about, this won't provide anything like enough to meet the shortfall on the fees, because their pensions are quite low.

It would work for someone with a decent sized pension (say 17k+).But such a person will probably also have a spare 75-100k or so in savings/investments stashed away and thus will be able to purchase a care annuity to meet the shortfall.So the house won't even be touched - it's safe for the family/kids.

There's no doubt the current system impacts on the independent but less well off group very severely.Effectively it wipes them out.They lose all the benefits of their savings and are reduced to the same level as people on benefits.

Many of these people will also be affected by the withdrawal of the 10p band and they will be more heavily impacted by the rises in basics like food and utilities.

The Government urgently needs to get a grip on how it's policies are impacting this group as many will be Labour voters.

Again, very emotive Ed, but just empty spin. I did like the "would probably have a spare 100k lying about", I can just imagine all of the OAP's falling over their piles bullion and dubloons trying to get at the 100k stash.

If an OAP can use a 'spare' £100k to buy a care annuity, why can't an OAP use their house equity to purchase one and then have access to a better standard of care home than 'people on benefits'?

Why is it now fair for someone who has been frugal enough through their working lives to get a £17k pa pension to have to pay for his care, while someone who has a small pension but a large house should get care for free?

EdInvestor

Dithering_Dad wrote: »

If an OAP can use a 'spare' £100k to buy a care annuity, why can't an OAP use their house equity to purchase one and then have access to a better standard of care home than 'people on benefits'?

It's not actually 100% clear that at the lower cost level there is any real difference between the standard of care given to the council funded and the self funded - except of course that the self funded people pay higher fees than the council residents in the next room (or bed), another source of anger..

Why is it now fair for someone who has been frugal enough through their working lives to get a £17k pa pension to have to pay for his care, while someone who has a small pension but a large house should get care for free?

They would both have to contribute to their care from their pensions. The house(s) would be disregarded if their is a spouse (and other qualified people) in residence.

I agree with your view that taxpayers should not fund people's inheritances.On the other hand I don't agree that some people's entire wealth can be wiped out in a few years of ill health while others will barely notice the effect.

There are various ways of reforming the issue:
-raise the threshold of assets that can be disregarded - 22k is derisory
-cap the cost, so beyond a certain level the state picks up the tab
-enforce the existing law on nursing care and Alzheimers patients ( this would meant the problem would almost disappear overnight)
- increase the tax breaks for self funders