One of the biggest concerns we have as we get older is what will happen to us if we cannot look after ourselves in our own home. Moving to a nursing home or care home is a hugely emotional time for everyone involved, and the situation can be made considerably worse if we are also worried about how we will pay for such care.

Nursing home fees are expensive, and many people are concerned that having to fund such care will wipe out any wealth they do have and eat into any potential inheritance they are hoping to leave to loved ones.

There are several steps you can take to protect your wealth from care home fees. In this blog, our Wills and Estate Planning team answer some common questions that you may have and look at what you can do to preserve your assets.

How much will I have to pay for care?

The average monthly cost of residential care in the UK is £3,290. Receiving nursing care in a care home costs an average of £4,160.

The price of care depends on several factors, including where you live, the type of care you need, how much you have in savings and other assets, and which care home provider you use.

You can read more about how much you are likely to have to pay here.

How much can I have in savings before I have to pay for care?

In England in 2022/23, you can have £23,250 in savings before you must begin paying for care. In Scotland, the threshold is £28,750, in Wales, it is £50,000, and in Northern Ireland, £23,250.

Will I have to sell my property to fund my care home fees?

If you plan early, there are several steps you can take to finance care home fees without having to sell your home. These include:

  1. Exploring other payment options. Care annuities, deferred payment schemes, equity release or renting out your home to generate income can all be good options to fund care and protect your assets.
  2. Making a financial gift. This option is usually one of the first that people think of, but if you are considering going down this route, you need to be careful. A council will consider in its assessment the value of any capital, property, or other assets that it thinks have been deliberately given away, even if you no longer have them. You can read more about the deliberate deprivation of assets rules by clicking here.
  3. Set up an asset protection trust. Also known as home protection trusts, or wealth preservation trusts, this is a way of no longer owning your property, though still maintaining rights over it.

What is an Asset Protection Trust (APT)?

An Asset Protection Trust splits the beneficial enjoyment of a property or other trust asset from its legal ownership.

There are several types of APT, including Protective Property Trusts, Life Interest Trust and Interest in Possession Trust.

In addition to protecting your estate for your beneficiaries, APTs can also protect against a potential future divorce or bankruptcy that one of your children may experience and avoid cost and time delays of probate. It can also help to avoid unnecessary inheritance tax.

How will an APT affect how much Inheritance Tax I pay?

When you give up your interest in the assets you place in trust, those assets will not form part of your estate for inheritance tax purposes. However, you can still retain control over these assets by acting as a trustee.

Expert Asset Protection Legal Advice

There are advantages and disadvantages to every estate planning tool, and we recommend that you seek specialist legal advice if you are considering making any changes.

Considering what you will do at an early stage and taking all the necessary steps in good time to protect your wealth is crucial. Forward planning will ensure that your assets are protected and give you the peace of mind you need.

If you want to find out more about asset protection trusts, please contact one of our friendly team today. You can call us on 023 9244 8100 or make an online enquiry.

Or, if you want some advice on any other aspect of estate planning, our friendly Wills and Probate team will be happy to help you. You can find out more about the services we offer here.