Ask the Expert: How can I make sure my dad doesn’t lose all his money paying his care fees?
PUBLISHED: 06:30 29 September 2018 | UPDATED: 09:46 29 September 2018
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My dad is in his mid-eighties and is getting quite frail. My mum died a few years ago and he gets by with a daily help coming in to clean and cook his main meal.
However, he’s now struggling to get himself up and dressed and has fallen over a couple of times in his bungalow so we think it’s time to think about a care home (he agrees).
He has a decent pension and an investment portfolio of around £250,000 on top of his bungalow so money isn’t too much of an issue, but he is worried that his estate will dwindle away if he spends several years in a home.
Is there anything we can do to avoid this such as giving some of his estate away before he goes into care?
Response from Carl Lamb of Almary Green
There are quite strict rules to prevent “deliberate deprivation of assets” – ie people giving away large portions of their wealth in order to get state help with care fees.
If someone is guilty of doing this, the amount given away may well still be considered as part of the individual’s wealth and so clawed back.
In fact, we always stress to families that funding care yourselves while you can is usually better for the person going into care because it widens their choices. If you do end up relying on your local authority to help, they will only contribute a basic amount.
Having said that, your father can continue to make “normal” gifts to manage the size of his estate and his future potential Inheritance Tax liability – in particular he can take advantage of the annual gift allowances that are immediately IHT-exempt.
Care fees can certainly make significant inroads into the family’s overall wealth: a report from Laing & Buisson in March 2018 quoted the cost of care in England at between £623 and £726 per week.
However, there are special income plans available that might be useful in your case.
Immediate care plans are a kind of enhanced annuity in that they provide a top-up to income to meet care fees for life.
While they do require a substantial initial outlay, the total amount your dad will pay for care – however long your he needs it – is ringfenced. They are tax-efficient too as the payments are normally made direct to the care home.