WARNING - Change to Long Term Care for elderly rules.

[CliveH]

There is a change in how means tested residential care for the elderly is going to be applied. This could be of enormous impact to those likely to be dealing with or looking after an elderly relative.

 

This arises from the increase in the ‘Upper Capital Limit’ in the means test for residential care to £118,000 from 2016. Individuals with total assets below this level will be guaranteed a full assessment and in many instances will begin receiving a financial contribution from their council toward their residential care fees.

 

The issue is this: Around half of older people in England with care needs have wealth at this level or below and for this group, the best financial advice would probably be to transfer wealth to family members to maximize how much they subsequently receive from the council if they move into residential care.

 

IFA’s have long provided tacit help on asset transfer to ensure qualification for means tested support, even if few shout about this. However, the new ‘Upper Capital Limit’ will see hundreds of thousands more people with an immediate incentive to move wealth to younger family members.

 

Although rules against ‘deliberate deprivation’ of assets are already in place, their application and the chasing down of transgressors is a very grey area.

 

Why am I mentioning it now several years before it is being introduced?

 

Well it is because an astonishing amount of effort is being applied into trying to ensure local authorities in future push those needing care toward independent financial advisers.

http://www.moneymarketing.co.uk/govt-to-strengthen-role-of-ifas-in-ltc-funding/2000460.article

 

(Note the term “independent” is IFA and “Regulated Advisers” refers to the product sales from Banks etc – so at least the Government is not pushing people towards the Product Sales people)

 

And frankly – as an IFA – I can see right through the spin whereby Local Government suddenly starts referring people to us as a profession expecting us to set up plans for clients based on todays rules, knowing that in a few years time those plans will be very VERY poor advice indeed!

 

So – should you be having to look after an elderly relative or perhaps be looking at the idea of Long Term Care for yourself - be careful!

 

[Mel B]

Hi Clive ... thanks for the info but not quite sure I understand! You say:

 

CliveH - 2013-10-08 8:10 AM

 

The issue is this: Around half of older people in England with care needs have wealth at this level or below and for this group, the best financial advice would probably be to transfer wealth to family members to maximize how much they subsequently receive from the council if they move into residential care.

I would have thought if there is a 'cap' it would those with assets at or ABOVE £118,000 that need to think about their wealth transfer etc, not those below this ... or have I mis-understood (not difficult!). :D

 

Also, you mention:

 

Although rules against ‘deliberate deprivation’ of assets are already in place, their application and the chasing down of transgressors is a very grey area.

This is something my Mum has been concerned about since she unexpectedly inherited some money from my late Dad as they never divorced despite being apart for over 20 years and he didn't get round to doing an 'official' will, so she 'had' very, very reluctantly to inherit.

 

Mum would like to give some of it away as Dad originally intended (to family, friends and charity) but being 88 is wary about doing so so I'm intrigued to know why it is a grey area as I thought it was quite clear cut ... if you give money/assets away and need financial help in future for care, you could be refused and your family could then find it necessary to pay for the deficit. :-|

[CliveH]

Hi Mel - Apologies - I could have explained it better

 

If I change that para to read:-

 

-The issue is this: Around half of older people in England with care needs CURRENTLY have wealth at this level or below and for this group, the best financial advice TO TAKE INTO ACCOUNT THE NEW £118,000 LEVEL would probably be to transfer wealth to family members to maximize how much they subsequently receive from the council if they move into residential care BETWEEN NOW AND 2016. -

 

The point is that it seems that Local Government are now going to refer people in this position to IFA's with the idea that we will set up a LTC plan for the individual based on todays far lower criteria.

 

Thus when the new £118,000 limit comes in in 2016, that poor client has all ready been "tucked up" under the rules that apply today (via some sort of irreversible LTC annuity) and so will not be able benefit from the new rules come 2016.

 

Now we IFA's are a cynical lot and when out of the blue you get Government/Local Government suddenly saying they are going to hand you business on a plate - we start to wonder why?

 

As for your second point - there are ways of achieving asset transfer that will not flag the transfer up.

 

I have PM'd you on this.

 

R

 

Clive