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Funding your long-term care

05 January 2012

Will you have to sell your home?

As our aging population increases, more and more of us are facing the prospect of funding our own care – and wondering how we’re going to be able to afford it.

Faced with such a daunting decision, many automatically think they will have to sell their home but that isn’t always the case, says Ruth Dolan, a Chartered Financial Planner with leading south east law firm Furley Page.

“People shouldn’t panic into making rash decisions,” she says. “There are many options to be considered before you go down that route and it’s vital you get proper advice to avoid depleting your assets unnecessarily.”

Under current rules governing the funding of long-term care, the cost is your responsibility if you have assets over £23,250. When being financially assessed, most of your assets will be incorporated, including your home. The exception is when the home is occupied by your partner or a relative who is over 60 or under 16.

“If you need to move into a care home then, generally, unless it is disregarded for the financial assessment or you have sufficient other assets, your home will need to be sold and the proceeds used to pay care fees. But there are options,” says Ruth.

“These include taking an equity release scheme, or purchasing a care fees annuity which provides an income for the rest of your life. These are usually purchased with a lump sum, often once a property has been sold, but it may be possible to secure the cost of an annuity against the value of your house if you don’t want to or can’t sell it.

“In some cases it’s possible to apply to the local authority for a deferred payment scheme, which is effectively an interest free loan secured upon the property,” says Ruth. “If you meet the right criteria, the authority may pay the shortfall between your income and the care fees. The payments will accrue as an outstanding loan which must be repaid once the property is sold. Interest is not payable until 56 days after your death and the rate is set by each local authority.”

Whatever option you choose, you need to understand the risks and the issues involved so it is imperative you seek advice from someone with specialist knowledge, adds Ruth. “By assessing your specific circumstances in full, they can ensure you make the right decision and protect your assets in the long term.”

Ruth Dolan is an accredited Later Life Adviser and member of SOLLA (Society of Later Life Advisers).

For further information about financial planning in later life, contact Ruth Dolan on 01227 763939.

Notes to editors

Ruth Dolan became an accredited Later Life Adviser after achieving membership of the Society of Later Life Advisers (SOLLA) in October 2010.  SOLLA aims to assist consumers to find quality and trusted financial advisers involved in the older client market by promoting the benefits of working with financial advisers who have achieved the Later Life Adviser Accreditation.

 

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