The Size of the Problem
One in three women and one in four men will eventually go into care. A recent survey showed that of those in the age group 45-65 it is expected that one half of them will require long term nursing care.
If you require care then the local authority can take all of your assets to pay for the care. They make you pay at the full rate until your capital runs down to £24,250 and then at a reduced rate until your capital runs down to £13,250. Accordingly only the last £13,250 of your capital is protected.
Technically the local authority cannot make you sell your house but if you do not sell voluntarily they simply put an Order on the property which means when you die or when it is sold whichever comes first the care costs have to be repaid.
Whereas Inheritance Tax is 40% above the £325,000 threshold.
Care cost tax can be 100% above the 24,250 threshold.
1. You can simply bury your head in the sand and hope that you never go into care.
2. You could transfer your assets to your family which is ill advised as you immediately lose control and take the risk of the family member becoming divorced or bankrupt or falling out with you or (as sometimes happens) you child could die before you.
In any event unless your child or children also lives in the property then the Principal Private Residence Relief for Capital Gains Tax will be lost and your child will be required to pay Capital Gains Tax when the property is eventually sold.
3. You could wait and when care was needed purchase an Immediate Care Cost Plan and some people do but this can be very expensive.
4. You could set up an Family Trust Plan and transfer the bulk of the assets into the Trust. Details of which are on “Family Trust Plans” page.
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