At the time a person needs care at home or in a residential or nursing home, the question that is uppermost in the minds of their family is how are they going to afford the cost of the fees for the care. With average costs being over 30,000 per annum, at this point, any hopes of leaving an inheritance for their family disappear as funding their care needs becomes uppermost and they have to fund this care with the sale of the family home.
It is important to remember at this point that individuals will not qualify for free care if they have assets, including their home, above 23,000 in England and Northern Ireland, twenty two thousan pounds in Wales and twenty two thousand five hundred pounds in Scotland. People usually have to pay for their own care as they are above the local authority funding limits (Tax year 09/10). There are some exceptions to these rules, but they are limited for everyone else. The next port of call would be to seek help from charitable sources but this is unlikely to be a permanent solution as charities have restricted funds.
A care fees annuity - otherwise known as an Immediate Needs Annuity(INA) is a very effective way of planning for the future costs of care fees. The lump sum premium is determined by how old a person is, if they are mail or femail and their health condition. Underwriting is done by receipt of medical information from a client's doctor and the care home. The greater the degree of frailty and illness, the lower the premium as the cost as is dependent upon the insurance company's view on the person's expected longevity.
Care fees Plansare a very effective way of protecting a family's estate against the danger of care fees running away with future inheritances. They allow a family to plan for the expenditure needed then plan for the future with confidence.
When a person is in care, as long as the monthly payments are paid to a registered care provider ie one registered with the Care Quality Commission (CQC), these payments do not affect the care recipient. These very practical plans are flexible as well as tax-efficient as, should the care recipient recover and be well enough to return home, the net payments can be paid to them directly to help them pay for any care they need to cope in their own home. If the benefits are then paid to a person directly, as with any other pension arrangement, they will have 20% tax deducted at source by the annuity provider. But only on a tiny element of the income.
As well as providing for the cost of care fees, these plans are also a tax efficient way of reducing an inheritance tax liability because, whilst securing a 40% discount on the cost of the care fees annuity, the cost of the lump sum can also be deducted from the estate as long as this excludes the costs of any capital protection.
Finally, it means that the following aims have been attained:-
Any remaining monies are preserved for the estate and the person receiving care can achieve their wish to leave an inheritance.
Any remaining monies are preserved for the estate and the person receiving care can achieve their wish to leave an inheritance. The costs of care have been dealt with thus protecting the balance of assets.
Savings are at the lowest level when the lump sum has been paid. Once this has been done, all future care fees are then covered, thus giving any monies left the chance to grow and replace savings.
In order to achieve the above objectives, ensure that you get the correct advice from an expert financial planner who has the necessary experience in the area of long term care. - 31884
It is important to remember at this point that individuals will not qualify for free care if they have assets, including their home, above 23,000 in England and Northern Ireland, twenty two thousan pounds in Wales and twenty two thousand five hundred pounds in Scotland. People usually have to pay for their own care as they are above the local authority funding limits (Tax year 09/10). There are some exceptions to these rules, but they are limited for everyone else. The next port of call would be to seek help from charitable sources but this is unlikely to be a permanent solution as charities have restricted funds.
A care fees annuity - otherwise known as an Immediate Needs Annuity(INA) is a very effective way of planning for the future costs of care fees. The lump sum premium is determined by how old a person is, if they are mail or femail and their health condition. Underwriting is done by receipt of medical information from a client's doctor and the care home. The greater the degree of frailty and illness, the lower the premium as the cost as is dependent upon the insurance company's view on the person's expected longevity.
Care fees Plansare a very effective way of protecting a family's estate against the danger of care fees running away with future inheritances. They allow a family to plan for the expenditure needed then plan for the future with confidence.
When a person is in care, as long as the monthly payments are paid to a registered care provider ie one registered with the Care Quality Commission (CQC), these payments do not affect the care recipient. These very practical plans are flexible as well as tax-efficient as, should the care recipient recover and be well enough to return home, the net payments can be paid to them directly to help them pay for any care they need to cope in their own home. If the benefits are then paid to a person directly, as with any other pension arrangement, they will have 20% tax deducted at source by the annuity provider. But only on a tiny element of the income.
As well as providing for the cost of care fees, these plans are also a tax efficient way of reducing an inheritance tax liability because, whilst securing a 40% discount on the cost of the care fees annuity, the cost of the lump sum can also be deducted from the estate as long as this excludes the costs of any capital protection.
Finally, it means that the following aims have been attained:-
Any remaining monies are preserved for the estate and the person receiving care can achieve their wish to leave an inheritance.
Any remaining monies are preserved for the estate and the person receiving care can achieve their wish to leave an inheritance. The costs of care have been dealt with thus protecting the balance of assets.
Savings are at the lowest level when the lump sum has been paid. Once this has been done, all future care fees are then covered, thus giving any monies left the chance to grow and replace savings.
In order to achieve the above objectives, ensure that you get the correct advice from an expert financial planner who has the necessary experience in the area of long term care. - 31884
About the Author:
Before you implement a long term care insurance policy that can protect against large care costs just access your remarkable free information written by barbara Davies, CEO of equityCare
