Whilst putting in place a comprehensive plan to pay for the costs of your care, there are a number of other areas which should be considered at the same time.
Making a Will
If you’ve not made a Will this should be addressed as a matter of urgency; it’s the only way of ensuring your remaining assets, after you have paid for your care, are distributed exactly in accordance with your wishes.
Writing a Will correctly can also help to reduce any Inheritance Tax payable on your death.
Powers of Attorney
For many people dealing with the financial aspects of needing care can be hard to deal with at what is already a difficult time.
Unfortunately some people, with certain medical conditions, will ultimately be unable to make financial decisions without help.
It therefore makes sense to consider if now is the time to put in place a Power of Attorney, which gives a trusted individual, power to make financial decisions on your behalf.
The main option here is a Lasting Power of Attorney, which can cover your financial as well as your health and well-being needs.
Enduring Powers of Attorney are no longer an option, although arrangements already in place can still be used and do not need to be replaced.
Inheritance Tax mitigation
Put simply, Inheritance Tax is paid on the value of assets you leave above the £325,000 threshold, also known as a nil rate band. If your spouse or civil partner has died first, you can add the unused percentage of their nil rate band to your own allowance, effectively increasing the amount of money or assets you can leave without paying tax.
Any assets you leave above the nil rate band, will be taxed at a rate of 40%.
As you start to plan for the cost of care, now is the ideal time to look at ways of reducing your Inheritance Tax liability. These two areas need to be looked at in tandem; after all, if you successfully leave your estate intact after paying for care, you may have simply increased the amount of Inheritance Tax payable on your death.
Plan, plan, and plan some more
All of the steps outlined in this guide, will help you make the right decisions when you or a loved one needs to face up to paying for care.
Whatever your personal circumstances you will need a coherent, considered strategy to weave your way through the maze that is care in later life and to work out exactly which of the options we have outlined are right for you.
An Independent Financial Adviser can be invaluable when it comes to helping you plan; it needs just this, planning, the more planning you do, the better the result will be.