Care Costs Crisis

The Daily Mail recently reported that an estimated 20,000 homes a year in the UK are sold to pay for the care costs of the owner, when that owner needs residential care.  That is a pretty dramatic figure and the Mail points out that effectively about 60 houses a day are sold to pay for care costs.  Each one of these sales represents a tragedy for the elderly owners and of course it also means their family also loses an inheritance, probably built up by the elderly owner over many years of prudent and thrifty behaviour. One of the problem issues for families with an elderly member needing care is the soaring cost of care itself.  The Mail also reports a rise in care costs of 20% over the last five years.  In Scotland nursing and personal care are free to all but accommodation care costs are not.  With accommodation care costs now frequently around £30,000 per year it is easy to see how someone’s assets can be devastated very quickly indeed if they have to move into care and pay for it.   Some financial help is available but anybody with capital valued at more than £22,750 has to pay.  With this limit being so low it means in practice that every householder in Scotland may be liable to pay for their own care costs – and many Scottish houses may be sold to pay for care. Is there a way of avoiding this problem?  Well at the moment there are several possible ways of dealing with this issue says Caesar and Howie Partner, Sarah Patrick., one of the firm’s Senior Issues team.  “What individuals must do is to organise their affairs so that a house is not owned by them individually at the time their assessment for help or otherwise for payment of care costs.  Placing a house in a Discretionary Family Trust where it is owned by trustees – usually the individuals themselves with their family will have that effect”.   However, any such trust must not be set up solely for the purpose of avoiding care costs.  Sarah adds “you need to act well before any care costs are in contemplation and the trust deed must make it clear that it was set up for different reasons.  But there are many legitimate reasons for setting up a trust for elderly people not least for the better management of their affairs if they become infirm.  If you like, the avoidance of care costs is a sort of beneficial side effect of the trust model”. Such trusts are becoming quite popular with families who really want to preserve assets but there are other routes to address the issue at least in part.   Lesley Cunningham, another partner in the Caesar and Howie Senior Issues team, comments  “Some families enter into less sophisticated arrangements such as gifting property to children but reserving the right to live in the house.  There are “pluses and minuses” with each route anyone chooses and advice must be sought at every stage.  Each family is different and what suits one may not suit another.  But, if you are worried about care costs – waiting till someone is about to go into care is much too late.  The legal steps which may help avoiding care costs have to be completed long before the point when care is needed – the longer the better”.