Long Term Care Return to all services
Paying for long term care fees can be a daunting prospect. These costs vary depending on where in the UK the person who needs the care lives. Currently, depending upon individual financial circumstances, some or the full cost of care may need to be paid for.
If you own your own home the local authority will take this into account in assessing your financial circumstances, unless your spouse or other qualifying people, e.g. a relative over the age of 60, continues to live in it.
If you need to pay for long term care fees and these are too high to be paid for from your income, there are several options to consider. Each has their advantages and disadvantages.
Before making any decisions it is important to fully understand the state support available. It is also a good idea to seek professional advice from an independent financial adviser like ourselves. We can ensure you are fully informed about all of the options available, advise you on a suitable course of action and where need be undertake regular reviews. Finally, the option chosen will be a big decision. It can be helpful to discuss the matter with close family before deciding how to fund the costs of long term care.
Using savings, investments or a pension fund
With this option existing savings, investments or a pension fund are used to cover the costs of long term care fees. This can be achieved by using them to generate the required income, by drawing on the capital or a combination of the two. The trick with this approach is knowing which assets to use, ensuring your funds are suitably invested and to regularly monitor them to understand how many years they are likely to cover the costs for.
Buying an immediate need long term care plan
These plans are similar to an annuity. In return for a lump sum they provide a guaranteed income for life. The down side to these plans are that if the person in care dies soon after the plan starts, it is likely to have provided poor value for money. This is unless the plan includes an element of capital protection, which can be included in return for a lower annuity rate. The big advantage to these plans is the guaranteed payments for life they provide. They remove the worry of savings and investments running dry with the above option, particularly if the person in care lives for longer than expected.
Releasing money from your home
Many people hold a significant amount of their wealth in their home. If you do not wish to sell your property but need access to the equity within it, there are schemes that can accommodate this, such as an equity release scheme.
If you are making plans for your future long term care, it could be a good idea to consider putting in place a Lasting Power of Attorney (LPA). With a LPA you give your consent for one or more person you trust, such as your children, to act on your behalf to manage your financial matters and make health and welfare decisions for you. If you are interested in setting up a LPA we can explain how this works in detail and help you put one in place.
There are a number of different options available to fund long term care and the above is only a very brief summary of the different paths available.