You may have spent a lifetime building your savings, paying for your home and planning what you would eventually leave to your family. However, the cost of long-term care can significantly affect those plans.
The purpose of planning ahead is not to hide money or avoid legitimate care charges. It is to understand the system, explore the lawful options available and make informed decisions before a crisis limits your choices.
Care Costs Can Reduce Savings Quickly
Care-home costs vary considerably according to location, the provider and the level of support required. Current estimates place average self-funded nursing-home fees at around £1,500 per week, although specialist care can cost considerably more. That could mean spending approximately £78,000 a year before additional personal expenses.
In England, someone with more than £23,250 in assessable capital will normally be expected to pay the full cost of permanent residential care. Local authority support may become available as their capital approaches the upper threshold, subject to care-needs and financial assessments.
What Happened to the £86,000 Care-Cost Cap?
Plans had previously been announced to introduce an £86,000 lifetime cap on eligible personal care costs.
However, the government confirmed on 29 July 2024 that the planned adult social care charging reforms would not proceed in October 2025. The proposed cap is therefore not currently part of the charging system.
It is also important to understand that even the proposed cap would not have covered every element of a care-home bill. The cancellation makes it even more important for families to understand how care may be funded and to plan before support is urgently required.
Five Options Worth Exploring
There is no single strategy that will be suitable for every person or family. The right approach depends on your health, finances, property ownership, family circumstances and wishes.
The following options may form part of a wider care and estate-planning discussion.
1. Review How Your Property Is Owned
Jointly owned property can be held in different ways, and the arrangement may affect what happens to each owner’s share after they die.
A solicitor may recommend reviewing whether the ownership structure still reflects your wishes and whether changes should be supported by updated Wills. However, changing property ownership does not automatically protect a home from future care costs.
Any decision must be made for genuine estate-planning reasons and with appropriate legal advice.
2. Consider a Life Interest Trust in Your Will
A life interest trust can sometimes be used within a Will to protect a share of a jointly owned property for chosen beneficiaries while allowing a surviving partner to continue living in the home.
This may be appropriate in situations involving:
• Children from a previous relationship
• Vulnerable beneficiaries
• Concerns about sideways disinheritance
• A wish to protect each partner’s intended beneficiaries
A trust does not make someone exempt from paying for care and cannot guarantee that assets will be excluded from a future financial assessment. Its suitability depends on individual circumstances, so specialist estate-planning advice is essential.
Be Careful About Deliberate Deprivation of Assets
Giving away money, transferring property or placing assets into a trust primarily to reduce future care charges can be treated as a deliberate deprivation of assets.
Where a local authority decides that deliberate deprivation has occurred, it may assess the person as though they still own the asset. There is no simple seven-year rule for care fees equivalent to the rule often discussed in relation to inheritance tax.
Be cautious of anyone promising that a trust or property transfer will definitely prevent your home from being used when calculating care charges.
3. Explore NHS Continuing Healthcare Funding
NHS Continuing Healthcare, commonly known as CHC, is a package of care arranged and funded entirely by the NHS for adults who are assessed as having a primary health need.
It is not means-tested and can be provided in a person’s own home or in a care home. Eligibility is based on the nature, intensity, complexity and unpredictability of the person’s needs rather than their diagnosis or financial position.
Where someone qualifies, CHC can cover the full assessed cost of their care, including accommodation fees where the package is provided in a care home.
Families should ask whether CHC has been considered, particularly where care needs are complex, intensive or unpredictable.
4. Consider a Deferred Payment Agreement
A Deferred Payment Agreement is an arrangement with a local authority that can allow an eligible homeowner to delay paying some of their care-home costs.
The council effectively provides a loan secured against the property, usually through a legal charge. The amount owed, together with applicable interest and charges, is normally repaid when the property is sold or after the person dies.
This does not remove the cost of care, but it may prevent someone from having to sell their home immediately. Eligibility criteria apply, and the local authority should provide full details of its terms and charges.
5. Investigate a Care Fees Annuity
A care fees annuity, also known as an immediate needs annuity, involves paying a lump sum to an insurance provider in return for a guaranteed regular income for life.
It is designed to cover some or all of the gap between a person’s income and their care fees. The amount required will depend on factors including their age, health, care costs and the income needed.
An annuity may provide certainty and reduce the risk of someone outliving their savings, but it requires a substantial upfront payment and cannot usually be reversed. Advice should be obtained from a regulated financial adviser with experience in later-life care planning.
Planning Ahead Gives You More Options
The most effective planning normally takes place while you still have the time and mental capacity to consider your choices carefully.
Useful steps may include:
• Reviewing your Will and estate-planning arrangements
• Putting both types of Lasting Power of Attorney in place
• Checking how your property is legally owned
• Understanding your current savings and likely retirement income
• Discussing future care preferences with your family
• Learning about NHS and local authority funding
• Taking independent legal and regulated financial advice
Planning does not guarantee that you will never have to contribute towards care. It can, however, help you avoid rushed decisions, understand your rights and make better use of the options legitimately available.
This article provides general information and is not a substitute for personalised legal or financial advice. Care-funding rules vary across the UK and can change over time.
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