As life expectancy has increased in recent years so has the number of people requiring long term care.
If you need long term care you may be concerned about how this will be paid for. Whether the care is to be provided in your own home or in a residential home, many people don’t have sufficient income to meet the cost.
The local authority will in some cases meet the cost of care but this will depend on your financial circumstances. Your home may need to be sold to pay for your care, although this shouldn’t apply if your spouse is still living there. The rules are complex and there are regulations in place to prevent individuals giving away assets to avoid paying for care.
What is right for you will depend on your individual circumstances, but planning ahead is essential.
Many couples make Wills that include a special type of trust known as a “Protective Property Trust” to protect the share of the house belonging to the first of them to die from having to be used to pay the care home fees of the survivor. However, this must of course be done well in advance. This is a robust and relatively inexpensive way of protecting some of the value of the family home so that it passes down to your children or the other beneficiaries on your death.
Other types of trusts can sometimes be used to protect assets in later life and “Asset Protection Trusts” are often mis-sold by unscrupulous companies wishing to cash-in on this. However, the “deliberate deprivation” rule means that if you give away your home or another asset for the purposes of avoiding care home fees, you can be assessed as if you still own it, making the trust worthless. So it’s important that you don’t set-up a trust for this reason and that you take legal advice about the implications if you are considering doing so.Asset Protection Trusts (also known as Lifetime Trusts) can, however, be used to protect assets in many other circumstances, such as avoiding Probate fees and Probate delays; for managing assets if you lose the ability to do so yourself in later life; and for protecting assets in case your children get divorced, separate or get into financial difficulties.