In an interview with the Mail on Sunday, Sir Sean Connery’s widow, Micheline Roquebrune, revealed the James Bond star was suffering from dementia when he died.
The former milkman, who went on to become an Oscar-winning Hollywood star, died at the age of 90 in October 2020. During the interview, Micheline said dementia had taken its toll on her husband, adding that it “was no life for him”.
The interview brings home the impact dementia can have. If the above comments aren’t sobering enough, the Alzheimer’s Society says the number of sufferers in Britain will rise from its current level of 850,000 to 1.6 million by 2040.
It also predicts that one person will develop the condition every three minutes.
It’s likely that many of those diagnosed with the condition will need care, so it’s not surprising that the issue of long-term care has risen up the political agenda in recent years. In April 2021, care home providers, health experts and politicians wrote to Boris Johnson calling for changes to the UK’s social care sector.
According to the BBC, they wrote a letter calling on the prime minister to make major reforms to social care, comparable to the founding of the NHS in 1948. Mr Johnson has pledged to unveil a long-awaited social care plan in 2021. It’s not only politicians that are keen for change. Figures recently released show coronavirus resulted in 46% of those providing care to friends or family having to increase the hours they spent doing so. Those who pay for care typically see the cost of it run into tens of thousands of pounds.
So, what are the financial implications of long-term care on you and your wealth? Read on to learn some of the ways you may be affected and the options that may be open to you.
There is a difference between a nursing home and a care home. A nursing home looks after people using registered nurses, while a care home looks after people using care assistants only.
An article by Which? revealed the average cost of a nursing home with full-time care had risen to £48,724 in 2019/20, nearly 5% more than the year before. This is highlighted in the chart below, which also shows the average cost of a residential care home in the UK rose 3% to £34,944 in the same period. The chart includes Northern Ireland.
|Year ending 31 March||Care homes per week||Annual increase||Nursing homes per week||Annual increase|
In the article, Which? points out that the above figures include the amount paid by local authorities, which brings the average cost down. This means that those paying for care themselves – maybe to stay in better quality surroundings – could pay more than the amounts above.
The consumer group also highlights that the cost of care can vary dramatically depending on where you live, with fees for nursing homes ranging from £735 a week in Northern Ireland to £937 in England.
A local authority assesses your financial situation to decide whether you should contribute towards care. If it decides you should, it will also determine how much you should pay.
Unused pension income, for example, may be taken into account by the local authority, which could reduce the size of your pension pot. As you can leave your pension pot to loved ones, this could reduce the amount you pass on to them.
According to carehome.co.uk around half of those in a care home are self-funding. An authority may provide full financial support for those with assets and income below a set amount.
In England, Wales and Northern Ireland, the NHS covers care costs if you qualify for continuing healthcare (CHC) due to complex health needs.
You should remember that if you do not have enough “cash savings” or accessible assets to pay the amount an authority assesses you should pay, it can use the value of your home under the Care Act 2015.
Known as a “deferred payment agreement” (DPA), the fees are paid to the local authority when the person being cared for dies and their home is sold. The authority cannot request a DPA while certain people occupy the property, such as a spouse.
While an agreement may be an effective way of affording more expensive care, interest can be charged by the authority. That said, the rates it can charge are limited.
The criteria around local authority funding, CHC and DPA are complex, so speak with us as your financial planners to confirm the situation.
As you will have gathered, the impact of care on your wealth could be significant, so you may be tempted to reduce your wealth through gifting your money. But beware: doing so is likely to carry consequences under the “deliberate deprivation of assets” rule.
Under the rule, a local authority can claw back any gift you have made when assessing your ability to pay for care, if it feels the gift was made to escape care costs.
This is a complicated area as gifting can be an effective way of dealing with an Inheritance Tax liability, so always speak to us about your situation.
Some of the possible solutions that might be available to you include:
Long-term care is a complicated area, so always speak with your financial planner before taking action. If you would like to speak with us directly, please contact us below.
This article is for information only. Please do not act solely based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.