Care Fees Trust Schemes - Reliable?
In a former life I practiced in the field of care fees planning, advising families on benefit entitlement as well as securing care costs with the minimum impact on inheritance value. I scorned any kind of "Protective Asset Trust" as it seemed pointless. The purpose of these Trusts is to "shelter" assets from the Local Authority means test resulting in the care recipient getting their fees paid and the family securing their inheritance.
Tempted though I am to judge the legitimacy of these arrangements - Lindsay Taylor a solicitor at Coffin Mew [unfortunate name] is less restrained and is quite damming in her assessment - I do not feel qualified to opine but will simply state the following.
The Local Authority will "top up" a person's income to their "tariff rate" - which differs from authority to authority; in Gateshead last year the council removed the cap on care recipient top up of £205 per week. This means there is no cap so as the cost of care increases the financial strain will only grow - a fact the purveyors of these Trust schemes will use to their advantage.
If the private care home selected charges £650 per week and the local authority tariff rate is, say £450 per week, who pays the difference? The difference - £200 per week or £10,400 per annum - could be met by creative financial planning and there are specialist advisory firms out there.
However, if the care recipient has "benefitted" from a protective asset trust and the local authority has been fooled and a place in the private care home secured - who pays the difference between the care home's fees and tariff rate? The £10,400 pa.
The children by the way will be in or very close to retirement; if mum is in her 80s there is a very good chance that children will be late 50s or into their 60s. Mum may live for a number of years in her new home, so at £10,400 pa increasing at say, 5% each year, a 5 year stay will require well over £60,000. Where will the family find this money? As soon to be pensioners themselves, unless the children have excellent pension provision - statistically this is unlikely - I foresee huge problems.
Maybe shelling out up to £5,000 for some kind of Trust is not the best idea after all? Regardless of the legal arguments I would suggest anyone contemplating such a course of action should sit down and reflect on what the outcome might actually mean.