How will you af­ford care home fees?

As cost of look­ing after el­derly soars to £33,000 a year...

Daily Mirror (Northern Ireland) - - NEWS - BY TRI­CIA PHILLIPS Per­sonal Fi­nance Ed­i­tor

Care home costs have shot up by 25% in the past five years to hit an av­er­age £33,094 per year, the Mir­ror re­ported yes­ter­day.

At the same time, pen­sions have stag­nated at an av­er­age of £14,522, which would pay for five months of care and leave a £19,382 short­fall in the an­nual fund­ing needed.

The av­er­age stay in a res­i­den­tial home lasts 30 months, so it leaves many fam­i­lies strug­gling.

But is there any help out there and who is en­ti­tled to it?

Here, we an­swer your ques­tions on the care fund­ing cri­sis: in your home it does not count to­wards the value of your as­sets for means test­ing and you won’t need to sell it. get if you ac­tu­ally moved into a care home. usu­ally have to make monthly re­pay­ments on the loan, it means the debt can soon build up.

Re­leas­ing a lump sum can also af­fect your en­ti­tle­ment to state ben­e­fits, so you must speak to an in­de­pen­dent fi­nan­cial ad­viser to en­sure you fully un­der­stand the im­pact it will have on fi­nances.

You could also con­sider a de­ferred pay­ment agree­ment, which is an ar­range­ment with the lo­cal au­thor­ity that lets peo­ple use the value of their home to help pay care home costs. If you are el­i­gi­ble, the coun­cil will help pay your care home bills and you can de­lay re­pay­ing the coun­cil un­til you choose to sell your home, or un­til after your death.

Many lo­cal au­thor­i­ties set a limit of be­tween 70% and 80% of the value of the prop­erty.

If you have money in ISAS or the bank you could con­sider buy­ing an im­me­di­ate needs an­nu­ity. This is a type of in­sur­ance pol­icy that pro­vides a reg­u­lar in­come in re­turn for an up-front lump sum. The in­come is tax free if paid di­rect to a care provider.

But you need to thor­oughly check this out be­fore you buy as there are risks. You will have to hand over a large sum of money that might cover, say, four years of care home fees. If you live for many years longer then this could be good value, but if you die quite soon, your fam­ily would not get any of your money back.

a will in place and set­ting up Power of At­tor­ney over your fi­nances and health­care can save lots of heartache.

It means if you take a turn for the worse your fam­ily will be able to sort ev­ery­thing out much more quickly and with­out hav­ing to deal with masses of red tape.

If you have sav­ings and as­sets it can be worth get­ting ad­vice from a lawyer to find out about the pos­si­bil­ity of putting things into trust for your chil­dren.

Al­though this needs to be done when you are fit and healthy – and with cau­tion.

If a coun­cil thinks you have de­lib­er­ately trans­ferred, say, the own­er­ship of your home to your chil­dren to avoid pay­ing care fees t h e y wi l l c h a l l e n g e this as “de­lib­er­ate de­pri­va­tion”.

In this case any trusts you had set up would be ig­nored.

HELP­ING HAND There are ways to plan for fu­ture care

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