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Living longer is leading to harder times

Today, the BBC has published worrying figures, obtained by the Labour party, which suggest that the number of elderly people in England who receive state funded care has fallen by 11 percent over the last two years.

The Labour party received 121 responses after asking 153 councils various Freedom of Information questions. The responses showed that the 121 councils who answered, provided free care to 66,342 over 65s in 2009-2010. Unfortunately, the number of over 65s receiving free care dropped by 7,286 over a two year period, to a total of 59,056 in 2011-2012.

When reading those figures, you might think that there may have simply been fewer over 65s eligible for state funded care in the period. However, the drop has occurred despite an increase in the number of over 65s in England during this period, due to the ageing population.

The reason why fewer over 65s have been eligible for free care over the last two years is because many councils have tightened their eligibility criteria, to respond to budget cuts. According to the responses received, only those over 65s with assets below £14,250 may receive completely free care. With average care fees currently standing at £13.61 per hour for home care, it seems that many over 65s will struggle to pay for their care, using up all of their assets in the process.

A White Paper is apparently to be published soon, detailing how the coalition government intends to reform social care but in a time of cutbacks and recession, the prospects do not look great.

A potential solution to this distressing conundrum is for people to take control of their own future care by considering care fee planning. After ensuring that their properties are held as ‘tenants in common’, to allow each share of their property to be held separately from the other, couples have a number of options.

Firstly, they may leave their ‘half’ of the joint property to their children, or another family member, outright. This means that upon the first spouse’s death, their half of the property passes to their children. The surviving spouse is left with only their half, to be used to pay for their care fees. There are drawbacks though, for an increase in value of the property during the children’s ownership can lead to capital gains tax becoming payable.

A more sensible option is for couples to leave their respective half shares of the property to the survivor for the rest of their life and then to the children outright. In this case no capital gains tax is payable if the surviving spouse chooses to sell the property. The surviving spouse is able to move house freely and have security in their home until external care becomes necessary. At this point the relevant local authority can only assess the capital value of the surviving spouse’s share of the property, for they only have a life interest in the other half.

For those couples considering leaving all of their property to children or family members outright, in an effort to avoid care fees altogether, a word of caution is necessary.  Local authorities may see through such cunning attempts, resulting in assets being retrieved for the purposes of contributing to care fees. Clearly there are options available to allow people to carefully plan for their future care needs but equally there are risks to avoid. Anyone thinking of making a will or who is concerned about care fees should seek guidance from a regulated professional.

Should you wish to make a will and/or discuss care fee planning, please do not hesitate to contact the Wills & Probate team at Blacks on 0113 207 0000.

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