For the first time ever, there are more people in the UK aged 60 and above than there are children, according to figures from the Office for National Statistics. This means that there are a record number of older people that need looking after and fewer than ever people to do it. Financial planning has become even more important.
Insurance products that will pay for care as long as it is required are one option. For example, Norwich Union's Immediate Care Plan will pay out a regular income to your parent or their care provider for as long as they live, but premiums for this kind of product can be very expensive.
Most people in old age want to stay in their own home for as long as they can, and only 4% of people over 65 currently live in care homes. To receive any help at home they need to contact the social services department of their local authority. While nursing care is available free on the NHS and personal care – such as washing and dressing – is available free in Scotland, every other kind of home help comes at a price. This price is determined by a combination of the level of care required and the financial position of the person who requires help. This is called an assessment of needs and will be carried out by a social worker.
Those who care for the elderly at home (often family members) can claim for a carer's allowance (£45.70 a week), although this is paid only if they are receiving either a disability or attendance allowance.
If the elderly person's assets – excluding the value of their home - are worth less than £20,500 (£21,000 in Wales and £19,500 in Scotland), the local authority will pay some or all of care home fees if they need to move out of home. These currently average £23,972 a year, according to a survey from the research company Laing & Buisson. However, after three months of someone entering a care home – if there is no remaining spouse at home – their property will start to be regarded as an asset and may be sold to fund further care.
Traditionally, the escape route out of this situation – and out of paying inheritance tax – was for parents to sign over their property to their children in advance. However, in April the government closed this loophole by introducing a pre-owned asset tax. If a property has been signed over to a child but is still lived in by their parents, the parents must pay tax on the 'benefit' they are receiving, unless they pay their offspring a full market rent.
