Hadlow Edwards - Footing the bill
To what extent are people prepared – both emotionally and financially – to provide care for themselves or their families? More of us than ever will come to need it. Few of us have any idea how we’ll pay for it. The growing cost of long-term care – and the strain that can come with providing support to elderly family members – is fast becoming one of the biggest challenges facing society today.
Understandably, moving into a care home can be an emotionally difficult time. Unfortunately, there is no instruction manual for how families should work together to handle care-giving and the many practical and emotional issues that go with it. Anxieties are bound to arise, along with a level of stress that you might not have expected – often made worse by financial worries.
According to research by The Centre for the Modern Family1, almost half of people avoid thinking about potential care costs, while one in four admit that they have no idea how they would cover the costs for themselves or a relative.
The research also reveals the degree to which people expect to be reliant on their family for financial support in the future. Half of UK adults say they will have to rely on a relative to help them afford care fees, which currently cost an average of £866 per week.2
Understandably, many of us will have misgivings about putting money aside for elderly care, especially if we have more immediate calls on our income. However, without a robust plan in place, it could fall to our families to make very expensive decisions. While equity release or selling a property could free up the money needed, many people will view this as a last resort.
If you end up having to pay fees yourself, known as ‘self-funding’, and your capital drops below £23,250 (capital drops below £23,250 in England and after April 2018 £40,000 in Wales) the local authority may assist with funding. However, the local authority might still take some of your income if you have less than this amount. It’s therefore important to seek expert advice so that you know the rules.
A financial adviser will also help you to avoid making some common mistakes, such as ‘deliberate deprivation’ – when you are judged to have purposefully given assets away to avoid these being included in the local authority’s financial assessment. Additionally, they will ensure you are receiving all the state benefits to which you are entitled.
The report’s findings are also a good reminder of the need for people to talk with their relatives about their plans for the years ahead. Aspects concerning care, downsizing, Wills and lasting powers of attorney are not always easy to approach, but they are vital if future decisions are to be based on a clear understanding of the recipient’s wishes. The sooner those conversations are had, the better.
Contributed by Warren Hadlow & Medwyn Edwards, Hadlow Edwards Wealth Management Limited. Telephone: 01978 311 611 - e-mail: firstname.lastname@example.org