Planning for Long-Term Care Costs in Your Will

When planning for the future, it’s important to consider how to protect your assets from risks such as long-term care costs. In a perfect world, we will be healthy and cognisant to the very end, but in many instances, our health will decline and come with some care costs. The financial impact can be significant, making planning essential so your children or beneficiaries do not stress about covering care home fees.

In this blog, we share what long-term care costs you could expect and the structures that can help ensure money will be available for those costs. A Will solicitor will help you with long-term care planning and set up the best structures for your needs.

What Do Long-Term Care Costs Include?

Long-term care costs refer to the expenses associated with providing ongoing support and assistance to individuals who can no longer manage daily activities independently. These costs arise when someone requires care due to ageing, illness, disability or cognitive decline (such as dementia). 

The type and cost of care depend on the individual’s needs, location and available support. Common forms of care include:

1. Residential Care Homes — Provide accommodation, meals, and personal care (help with washing, dressing, and mobility) for people who do not want to or can’t stay in their homes. This is often the easiest option for a busy extended family.
2. Nursing Homes — These facilities offer medical care provided by trained nurses, which is often required for those with complex health conditions.
3. Domiciliary (Home) Care — Support provided in the individual’s home, including help with personal care, meal preparation, and housekeeping. This type of care is when someone can generally care for themselves but could use a little help and doesn’t need someone to live with them to watch over them. Often, family members help out with tasks, but many are busy with jobs and their own households.
4. Live-in Care — A caregiver lives in the home to provide round-the-clock assistance. This option is good for someone who wants to live in the comfort of their own home but needs more help.
5. Respite or Temporary Care — Short-term care for those recovering from illness or surgery or to give family carers a break.
6. Specialist Care — Useful for conditions like dementia or Parkinson’s disease that require specialised, tailored support.

How Are Long-Term Care Costs Assessed and Paid?

Care costs vary depending on the type of care required and its location. Local authorities conduct a financial assessment (means test) to determine whether an individual must contribute towards their care costs.

• If a person’s assets exceed £23,250 in England), they must self-fund their care and pay until their savings fall below the limit.
• If assets fall between £14,250 and £23,250, they contribute a portion of their care costs.
• If assets are below £14,250, the local authority funds care but may require pension or income contributions.
• NHS Continuing Healthcare (CHC) is fully funded care for those with severe medical needs, which the NHS assesses, but it may not cover residential costs.
  
• Deferred Payment Agreements: The local council may allow a person to delay care payments by placing a charge on their property, which is repaid after death.

What Structures Protect Your Assets?

Several legal and financial structures can help safeguard your wealth while ensuring it is passed on according to your wishes. Without proper planning, care costs can significantly reduce inheritance for beneficiaries. Seeking legal and financial advice from a qualified attorney early in the process can help you set up structures to cover these expenses while ensuring care needs are met.

1. Trusts

Trusts are one of the most effective ways to protect assets while providing for beneficiaries. We can help you set up and manage the right Trust for your needs. Some key types of Trusts include:

• Life Interest Trusts — Allow a beneficiary (e.g., a spouse) to benefit from an asset (e.g., living in a property) while preserving the capital for other beneficiaries (e.g., children).
  
• Discretionary Trusts — Give trustees control over how and when assets are distributed, offering flexibility and protection from care costs or financial risks.
  
• Property Protection Trusts — Ensure a share of a property is safeguarded for children or loved ones, even if the surviving spouse needs care.

2. Lasting Power of Attorney (LPA)

A Property and Financial Affairs LPA ensures a trusted individual manages your finances if you lose capacity. Without this, your assets could be controlled by the Court of Protection. Creating a Lasting Power of Attorney is one of our most popular services. Whether you want to denote an attorney, a close family member or a friend, we can help you set up an LPA that fits your needs.

3. Gifting Assets

You can reduce exposure to inheritance tax and care costs by gifting assets to family members during your lifetime. However, local authorities may challenge this under deliberate deprivation of assets rules if done to avoid care fees. 

4. Joint Ownership and Tenancy Arrangements

Tenants in Common (instead of Joint Tenants) allow co-owners to pass their share of a property via a Will rather than automatically transferring it to the surviving owner. This helps protect part of the home from care fees or remarriage claims.

5. Business and Agricultural Relief

If you own a business or farmland, Business Property Relief (BPR) and Agricultural Property Relief (APR) can reduce inheritance tax, making it easier to pass assets to future generations.

6. Insurance Policies

Life insurance policies held in Trusts ensure the payout does not form part of the taxable estate, protecting funds for beneficiaries.

7. Pre-Nuptial and Post-Nuptial Agreements

For business owners or those with significant assets, marital agreements can help protect wealth from divorce settlements.

Why Seek Legal Advice?

Proper estate and asset protection planning requires tailored legal and financial strategies. Speaking to a solicitor at our Brighton office can help protect your wealth while complying with UK tax and care funding laws.

If you need advice on creating a Trust and planning your options to cover long-term care costs, contact the friendly team at Burt Brill & Cardens today. Call us on 01273 604 123, email us at enquire@bbc-law.co.uk or make an enquiry.