Long-term Care

Choosing the right care is probably something few of us have much experience of and can feel overwhelming.  The care system can be complicated and difficult to find your way through and research suggests the majority of people receive insufficient advice about how care fees can be funded.

No one given a choice would opt to spend all the assets built up over a lifetime on care fees. With more of us needing long-term care as a result of living longer, serious consideration must be given now to how you will fund these fees without eroding your family’s legacy.

Unlike health care, social care is rarely free. Most people who opt for residential care will have to pay some or all of the costs themselves. Council funding may be available, but this is means-tested. In England, if you have savings worth more than £23,250 or you own your own property, you will usually not be entitled to help with the cost of a care home. And to qualify for fully funded care, your savings or assets would need to be worth less than £14,250.

The most common approach for funding any ‘shortfall’ between existing income and care costs tends to be to simply draw down what is needed each month from savings, and perhaps property sale proceeds, and hope that these do not run out completely.

Running out of money means relying on the local authority to fund your care, and there are no guarantees the local authority will wish to maintain the same payment levels. Unless your family is able to make up the difference, compromises may have to be made. In addition, of course, using up all the money to pay for care means there is no legacy to leave to loved ones.

However, with financial planning it may be possible to fund care for as long as required, whilst safeguarding as much capital as possible.

There are specialist insurance plans called an immediate needs annuity these are specialist insurance plans designed to convert capital into income to help meet care fees. In return for a one-off lump sum you receive a guaranteed tax-free income for life, provided that it is paid directly to the care provider. 

If you are making decisions under a Power of Attorney as it is your duty to act in the other person’s best interests any decision should only be made once you are in possession of all the facts. 

In England and Northern Ireland, for tax year 2026/27.