Planning for care fees: How to protect your finances and peace of mind
Many of us will require social care at some point in our lives, whether at home or in a residential care home. Planning for care fees can ease stress for both you and your loved ones, ensuring financial security and peace of mind.
Understanding how care fees are assessed, what financial contributions you may be required to make and the importance of legal protections like a lasting power of attorney can help you navigate this challenging time.
Who pays for care? Understanding financial assessments
The first step in planning for care fees is understanding how costs are assessed. If you have savings of more than £23,250 and/or own a property, you will be responsible for covering all care costs until your capital falls below this threshold (unless you qualify for full NHS Continuing Care or are provided for under Section 117 of the Mental Health Act 1983).
If your savings and/or capital are £23,250 or less, you can apply for a financial assessment by your local council to determine your contribution.
The council will evaluate your earnings, pensions, benefits, savings and property. Capital below £14,250 is disregarded, but any amount above this will be considered in the assessment. You will always be left with a Personal Expenses Allowance, which is currently no less than £30.15 per week and will be reviewed in April 2025.
What happens if you own a property?
If you own a home and move into a residential care home, you may need to sell or rent out the property to cover care fees. However, there are exceptions:
- If your spouse or partner continues living in the property, it will be disregarded in the financial assessment.
- The property is also disregarded if another resident is over 60 years old or disabled.
Attempting to transfer or spend assets before entering care to avoid fees can be considered deliberate deprivation, which councils have the right to investigate.
The importance of a lasting power of attorney
Another essential aspect of planning for care fees is ensuring that trusted individuals can manage your finances and healthcare decisions if you become unable to do so. There are two types of lasting power of attorney (LPA):
- Property and financial affairs LPA – Allows your chosen attorney to manage your bank accounts, investments, direct debits and property matters, including selling your home if necessary.
- Health and welfare LPA – Comes into effect only if you lack mental capacity. Your attorney can liaise with healthcare professionals, make decisions about your care home and even consent to or refuse life-sustaining treatment according to your wishes.
Registering an LPA currently takes 8-10 weeks, so it is wise to plan ahead. Without an LPA, managing care home payments can be challenging, potentially leading to late payment fees or interest charges.
What if you lack mental capacity?
If you lose mental capacity before setting up an LPA, a family member, friend or professional attorney must apply for a Court of Protection order to manage your affairs. This is a more complicated and costly process than creating an LPA in advance, but we can still help.
Plan ahead for peace of mind
Taking proactive steps to plan for care fees ensures your financial and personal affairs are handled smoothly. By understanding care fee assessments, protecting your assets and setting up an LPA, you can secure your future and reduce stress for your loved ones.
If you would like expert guidance on planning for care fees, contact Private Client Lawyer Kathryn Livesey on 01943 885 798 or email ku.oc1748052733.fcl@1748052733yesev1748052733ilk1748052733.
