Will Care Home Fees Wipe Out Your Children's Inheritance?

The concern about care home fees depleting inheritance is one that many families face. While care costs can significantly impact estate value, understanding the rules, protections, and planning options available can help families make informed decisions about protecting assets while ensuring access to quality care.

Understanding Care Home Costs and Estate Planning

Care home fees represent a substantial financial commitment. According to the MoneyHelper guide to care costs, average residential care home fees range from £700 to £1,200 per week, with nursing care potentially costing more. However, various factors affect how these costs impact potential inheritance.

How Care Home Fees Are Funded

The way care is funded depends on individual circumstances. Local authorities assess both income and capital assets when determining how care will be paid for. Current thresholds (2024/25) in England are:

Upper capital limit: £23,250

• Above this, you pay full fees
• Assets include savings and investments
• Property may be included in some cases

Lower capital limit: £14,250

• Below this, only income is considered
• Capital is disregarded
• Some income remains protected

Property Protection and the Family Home

Often the largest asset in any potential inheritance, the family home receives specific protections in certain circumstances. The Age UK guide to property and care fees outlines important protections when:

• A spouse or partner continues living there
• A relative aged 60 or over lives there
• A disabled relative lives there
• A dependent child lives there

These protections ensure the property isn't included in financial assessments while qualifying people continue living there.

Legitimate Ways to Protect Assets

While deliberate attempts to avoid care fees can be challenged, several legitimate approaches exist for protecting family assets:

Care Fee Planning

Professional financial planning can help protect assets through:

• Appropriate investment structures
• Care fee payment plans
• Insurance-based solutions
• Pension arrangements

Strategic Financial Planning Options

While protecting inheritance requires careful consideration, several legitimate strategies can help balance care funding with preserving assets. The MoneyHelper guide to care planning outlines various approaches.

Care Fee Annuities

Also known as Immediate Need Care Fee Payment Plans, these insurance products can provide certainty about care costs while protecting remaining assets. They work by:

• Providing guaranteed income for life to cover care fees
• Protecting remaining assets from care cost erosion
• Offering potential inheritance tax benefits
• Creating certainty around future care funding

While requiring substantial initial investment, these plans can help preserve remaining assets for inheritance by capping the total cost of care.

Early Planning and Asset Protection

Early financial planning, well before care is needed, often provides the most options for protecting potential inheritance. The Society of Trust and Estate Practitioners (STEP) recommends considering:

Trust Arrangements

Various trust structures can help protect family assets while ensuring access to funds when needed. However, these must be established for legitimate estate planning reasons, not specifically to avoid care fees. Professional advice is essential to ensure arrangements are appropriate and legal.

Investment Structures

Careful investment planning can help:

• Generate income for care fees
• Preserve capital where possible
• Maintain access to funds when needed
• Provide tax efficiency

The Role of Property

Property often represents the largest portion of potential inheritance. Several options exist for managing property assets effectively:

Deferred Payment Agreements

Local authorities may offer deferred payment agreements, allowing care fees to be paid from the eventual sale of your property, typically after death. This can help preserve the property within the estate while ensuring care needs are met.

Rental Income

If the property is suitable, rental income could help:

• Cover or contribute to care fees
• Maintain the property's value
• Generate ongoing returns
• Preserve the asset for inheritance

NHS Continuing Healthcare

Some people qualify for NHS Continuing Healthcare, which provides full funding for care needs. The NHS guide to continuing healthcare explains eligibility criteria and assessment processes.

While primarily health-based rather than means-tested, qualifying for NHS Continuing Healthcare can help preserve assets for inheritance by removing the need to self-fund care.

Professional Advice and Planning

Given the complexity of care funding and inheritance planning, professional advice is crucial. Consider consulting:

• Financial advisers specialising in later life planning
• Legal professionals with expertise in estate planning
• Care funding specialists
• Tax advisers for inheritance tax planning

Making Informed Choices at Ashberry Care Homes

At Ashberry Care Homes, we understand the importance of balancing quality care with preserving family assets. Our experienced team can help you understand your options and connect with appropriate professional advisers to create a sustainable care funding plan that considers both immediate needs and longer-term estate planning goals.

We work closely with residents and their families to:

• Understand individual circumstances
• Explore all available funding options
• Create sustainable care plans
• Protect family interests where possible

Support for Your Care Journey

Contact our friendly team today to discuss your care needs and learn how we can help you plan effectively for the future. We're committed to helping you make informed decisions that balance quality care with preserving your family's financial security.

Remember, while care home fees can impact potential inheritance, careful planning and professional advice can help protect family assets while ensuring access to the quality care you deserve.

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