29 October 2012

Paying for Care Fees

An issue of increasing concern for many families is how to pay care fees in later life.
Anyone with sufficient assets - and that certainly applies if you own a house - has to fund their own care, rather than having the local authority pay. That often means selling the house (although that doesn't apply if a spouse is still living there). The estimate is that 40,000 people per year have to do this.
There is a "12 Week Disregard" provision which theoretically allows time for a house sale. The problem is that it might take a lot longer to sell a house in the current market - and what do you do in the meantime? There is a local authority scheme to take an interest-free loan, but there are limits on this which means that it might not help.
The Government's Social Care White Paper includes the idea of a Universal Deferred Payment Scheme. This would provide a low interest loan while the house sale took place; it could even be deferred until the local property market improves.

Once you've sold the house you could either invest the proceeds, taking enough out to pay the care fees, or buy an Immediate Needs Annuity which will pay a regular amount (tax free if paid direct to the care home). The annuity option transfers the risk that you might live a long time to someone else -otherwise you could find yourself running out of money.

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